PSKY 10-K & 10-Q changes, risk factors and insider trading

The proposed WBD Merger could cause disruptions to our business or commercial relationships, or those of WBD, which could have an adverse impact on our and WBD’s business, financial condition or results of operations. Parties with which we or WBD have business relationships may experience uncertainty as to the future of such relationships and may delay or defer certain business decisions, seek alternative relationships with third parties or seek to alter their present business relationships with us. Parties with whom we or WBD otherwise may have sought to establish business relationships may seek alternative relationships with third parties. We have experienced, and may continue to experience, negative publicity relating to the WBD Merger, which could have an adverse effect on our or WBD’s ongoing operations including, but not limited to, retaining and attracting employees and creative talent, maintaining our relationships with existing customers and obtaining potential new customers. We compete with other content creators for creative talent, including producers, directors, actors and writers and if we fail to retain or attract new key employees or creative talent, our business, financial condition or results of operations could be adversely affected.

The WBD Merger cannot be consummated until conditions to Closing (as defined in the WBD Merger Agreement) are satisfied or, if permissible under applicable law, waived. The WBD Merger is subject to numerous Closing conditions, including the receipt of required regulatory approvals.approvals and the absence of any orders enjoining the consummation of the WBD Merger. See “—The WBD Merger is subject to a number of Closing conditions and, if these conditions are not satisfied, the WBD Merger Agreement may be terminated in accordance with its terms and the WBD Merger may not be consummated. In addition, the parties have the right to terminate the WBD Merger Agreement under certain circumstances, in which case the WBD Merger would not be consummated.”

There can be no assurance that the conditions to completion of the WBD Merger, including the receipt of required regulatory approvals, will be satisfied or waived on a timely basis or at all. Further, there can be no assurance that governmental authorities will not impose conditions, terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not have the effect of delaying or preventing consummation of the WBD Merger. IfFor WBDexample, orin ParamountJuly is2026, requiredtwelve tostates divest(California, assetsArizona, orColorado, businesses,Connecticut, thereMassachusetts, canMinnesota, beNevada, noNew assuranceJersey, thatNew weMexico, orNew WBDYork, willOregon beand ableWashington) tofiled negotiatean suchantitrust divestitures expeditiously or on favorable terms or that the governmental authorities will approve the terms of such divestitures. In addition, we can provide no assurance that these conditions, terms, obligations or restrictions will not resultaction in the abandonmentU.S. District Court for the Northern District of California against Paramount and WBD relating to the WBD Merger.Merger, Ifseeking to block the conditionsWBD toMerger, completionamong ofother relief. On July 24, 2026, we entered into a stipulation agreeing that the WBD Merger arewill not satisfiedclose, and we will not take any steps to integrate the operations of Paramount with those of WBD, until the earlier of five days following the court’s ruling or waived,June we1, may be unable to complete the WBD Merger in the timeframe or manner currently anticipated or at all.2027.

If the WBD Merger is not completed by September 30, 2026, we have agreed in the WBD Merger Agreement to pay as merger consideration to WBD stockholders an additional amount in cash equal to $0.00277778 multiplied by the number of calendar days elapsed after September 30, 2026, to and including the closing date (which, for the avoidance of doubt, will not exceed $0.25 per 90 calendar day period). The anticipated closing of the WBD Merger has been delayed as a result of the lawsuit described above, with the parties agreeing to postpone closing until the earlier of five days following the court’s ruling or June 1, 2027.

•we will be required to pay certain costs relating to the WBD Merger, whether or not the WBD Merger is consummated, such as significant fees and expenses relating to financial advisory, legal, accounting, consulting or other advisory fees or expenses, employee-benefit or related expenses, regulatory filings or filing and printing feesfees, none of which we would be able to recover; or

•matters relating to the WBD Merger may require substantial commitments of time and resources by our management or the expenditure of significant funds in the form of fees and expenses, which could otherwise have been devoted to day-to-day operations or other opportunities that may have been beneficial to us.us;

In addition, if the WBD Merger is not consummated, we may experience negative reactions from the financial markets or from our employees, commercial partners, clients or customers. We could also be subject to litigation, including litigation related to failure to consummate the WBD Merger or to enforce our obligations under the WBD Merger Agreement. If the WBD Merger is not consummated, there can be no assurance that the risks described above will notmay materially adversely affect our business, financial condition, results of operations or stock price. For a description of the circumstances under which the Regulatory Termination Fee is payable, see the WBD Merger Agreement.

Paramount and WBD must obtain certain regulatory approvals in order to consummate the WBD Merger; if such approvals are not obtained or are obtained with conditions,conditions or if the WBD Merger is enjoined in connection with legal or regulatory proceedings, the WBD Merger may be prevented or delayed or the anticipated benefits of the WBD Merger could be reduced.

The Closing is conditioned upon, among other things, the clearance or approval by various regulatory authorities in the United States and other jurisdictions.jurisdictions and the absence of any orders enjoining the consummation of the WBD Merger. As a condition to granting the necessary approvals or clearances, regulatory authorities may impose conditions, terms, obligations or restrictions or require divestitures or place restrictions on our business after consummation of the WBD Merger. If any such divestitures negatively impact our credit profile and credit ratings as compared to the combined business if we did not have to undertake such divestitures, we may not be able to obtain financing on as favorable terms as we otherwise anticipated, or at all. Any such requirements or restrictions sought by regulatory authorities could negatively affect our business, financial condition or results of operations following consummation of the WBD Merger. Any such requirements or restrictions may prevent or delay consummation of the WBD Merger or may reduce the anticipated benefits of the WBD Merger, which could also have a material adverse effect on our business, financial condition or results of operations.

The WBD Merger is subject to a number of Closing conditions and, if these conditions are not satisfied, the WBD Merger Agreement may be terminated in accordance with its terms and the WBD Merger may not be consummated. In addition, the parties have the right to terminate the WBD Merger Agreement under certain circumstances, in which case the WBD Merger would not be consummated.

Litigation relating to the WBD Merger could prevent or further delay the Closing and/or result in the payment of damages following the Closing.

In addition, federal, state, and/or foreign governmental authorities have initiated, and could initiate one or more enforcementadditional, actions challenging the WBD Merger.Merger, Any such actionswhich could further delay or prevent the Closing, or result in the imposition of burdensome conditionsconditions, thatterms, couldobligations or restrictions, or otherwise adversely affect the post-close entity. The anticipated closing of the WBD Merger has been delayed as a result of the lawsuit described above, with the parties agreeing to postpone closing until the earlier of five days following the court’s ruling or June 1, 2027.

Although we expect the WBD Merger will result in synergies and other benefits, those synergies and benefits may not be realized or may not be realized within the expected time frame. WBD’s business may not be integrated successfully, or such integration may be more difficult, time-consuming or costly than expected. Operating costs, customer loss and business disruption, including difficulties in maintaining relationships with employees, customers, suppliers or vendors, may be greater than expected following the WBD Merger. Revenues following the WBD Merger may be lower than expected.

Our ability to realize the anticipated benefits of the WBD Merger will depend, to a large extent, on our ability to integrate WBD’s business in a manner that facilitates growth opportunities or achieves the potential synergies, cost savings or revenue growth opportunities identified by Paramount without adversely affecting current revenues or investments in future growth. If we were required to divest certain businesses or assets, it may reduce our ability to fully recognize such synergies. Even if we are able to integrate WBD successfully, the anticipated benefits of the WBD Merger, including the expected synergies, may not be realized fully or at all or may take longer to realize than expected.

The acquisition of another public company and integration of its business with our business is complex, costly and time-consuming and may divert significant management attention or resources towards integration planning at the expense of Paramount’s and WBD’s ordinary course business practices and operations. Paramount and WBD have been operated as standalone businesses, and they will continue to be operated as such until the consummation of the WBD Merger. Upon consummation of the WBD Merger, our management may face significant challenges in integrating the technologies, organizations, systems, procedures, policies and operations, as well as addressing the different business cultures at Paramount and WBD, managing the increased scale and scope of the combined businesses, identifying and eliminating duplicative programs, and retaining key personnel. The post-closing integration process could take longer than anticipated and could result in the loss of key employees, the disruption of each company’s ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, employees or other third parties. The overall combination of Paramount’s and WBD’s businesses may also result in material unanticipated expenses, liabilities, competitive disadvantages, and loss of customer, creative talent and other business relationships. Failure to efficiently and effectively integrate the two businesses and to realize the anticipated benefits of the WBD Merger could adversely affect our business, financial condition or results of operations. We have entered into a stipulation agreeing that the WBD Merger will not close, and we will not take any steps to integrate the operations of Paramount with those of WBD, until the earlier of five days following the court’s ruling or June 1, 2027.

Many of these factors are outside of the control of Paramount and WBD, and any one of them could result in lower revenues, higher costs and diversion of management time and energy, which could materially and adversely impact our business, financial condition or results of operations. In addition, even if the operations of WBD’s business are integrated successfully with Paramount, the full benefits of the WBD Merger may not be realized, including, among others, the synergies, cost savings or sales or growth opportunities that are expected. These benefits may not be achieved within the anticipated time frame or at all. Further, additional unanticipated costs may be incurred in the integration of WBD’s business.business and the financing of the transactions. All of these factors could cause dilution to the earnings per share of Paramount, decrease or delay the projected accretive effect of the WBD Merger, and negatively impact the price of our Class B Common Stock following the WBD Merger. As a result, no assurances can be provided that acquisition of WBD will result in the realization of the full benefits expected from the WBD Merger within the anticipated time frames or at all.

We have incurred, and will continue to incur, substantial direct and indirect costs as a result of the WBD Merger.

We have incurred, and will continue to incur, substantial expenses in connection with and as a result of completing the WBD Merger, including financial advisory, legal, accounting, consulting and other advisory fees and expenses, employee-benefit and related expenses, regulatory filings, financing fees and filing and printing fees. In addition, over a period of time following the Closing, we expect to incur substantial expenses in connection with integrating and coordinating WBD’s business, operations, policies and procedures. A portion of the transaction costs related to the WBD Merger will be incurred regardless of whether the WBD Merger is completed. While we have assumed that a certain level of transaction expenses will be incurred, factors beyond our control could affect the total amount or the timing of these expenses. Many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. These expenses may exceed the costs historically borne by us. These costs could adversely affect our business, financial condition or results of operations. We expect that these expenses will increase, the longer it takes to complete the WBD Merger.

We are incurring substantial indebtedness in connection with the WBD Merger. As of MarchJune 31,30, 2026, as adjusted for the WBD Merger, including assuming (i) an estimated $17.8$17.7 billion of outstanding senior notes of WBD as of DecemberMarch 31, 2025,2026, are assumed in connection with the WBD Merger, (ii) borrowing the full amount of the $49.0 billion 364-day senior secured bridge term loan facility (or any other permanent financing incurred to reduce or replace such facility), including to refinance the $15.0 billion WBD bridgeTerm facility,Loans, (iii) the two term A loans each for $2.5 billion to be funded onat the closing date of the WBD Merger,Closing, with maturities of three and five years, respectively, (iv) that our existing revolving credit facility is paid down at the closing of the WBD MergerClosing and (v) that the new $5.0 billion five-year senior secured revolving credit facility remains undrawn, we would have had approximately $85.2$86.3 billion of total debt (excluding debt issuance costs and capital lease obligations).

Our existing stockholders will have a reduced ownership and economic interest in Paramount after the WBD Merger. The PIPE Transaction and the issuance of the Warrants may cause dilution to the earnings per share of Paramount, which may negatively affect the market price of our Class B Common Stock.

Following closing of the WBD Merger,Closing, it is anticipated that the Equity Syndication Parties (excluding affiliates of the Ellison Parties and RedBird) will receive approximately 39%40% to 42%43% of the outstanding shares of our Class B Common Stock as a result of the PIPE Transaction (as defined in the WBD Merger Agreement). Consequently,The ourshares existingof stockholdersClass willB haveCommon aStock reduced ownership and economic interest. Similarly, a changeissued in the concentrationPIPE Transaction will represent, in the aggregate, 73% to 78% of the ownershipshares of our Class B Common Stock asoutstanding aafter resultgiving ofeffect to the WBDPIPE Merger may affect the public floatTransaction and tradingassuming volumeno inTicking ourConsideration Classis B Common Stock, which could adversely affect the trading price of shares of our Class B Common Stock.payable.

The issuance of shares of our Class B Common Stock as part of the PIPE Transaction and the shares of Class B Common Stock issuable upon the exercise of the Warrants could have the effect of depressing the market price of our Class B Common Stock. Furthermore, if we raise additional equity capital following the Closing, including in order to achieve our deleveraging goals with respect to the substantial indebtedness we will incur in connection with the WBD Merger, any such equity financings would result in additional dilution to holders of our common stock. In addition, we could encounter other transaction-related costs or effects, such as the failure to realize all of the benefits anticipated in the WBD Merger, which could cause dilution to earnings per share or decrease or delay the expected accretive effect of the WBD Merger and cause a decrease in the market price of our Class B Common Stock. We may also be required to pay the $7.0 billion Regulatory Termination Fee pursuant to the terms of the WBD Merger Agreement, which is expected to be financed through the issuance of additional shares of Class B Common Stock pursuant to the terms of the Subscription Agreements. If this occurs, it would result in dilution to our existing stockholders even if the WBD Merger is not consummated.

Management’s discussion and analysis of the results of operations and financial condition of Paramount Skydance Corporation should be read in conjunction with the consolidatedmore detailed financial statements and relatednotes notesthereto included in our Form 8-K filed with the Securities and Exchange Commission on May 13, 2026, which was filed in order to recast the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 ofto reflect our Predecessor,new Paramountsegment Global.presentation. References to “Paramount,” the “Company,” “we,” “us” and “our” refer to Paramount Skydance Corporation and its consolidated subsidiaries, unless the context otherwise requires.

Warner Bros. Discovery Merger—On February 27, 2026, Paramount and Warner Bros. Discovery, Inc. (“WBD”) announced a definitive merger agreement (the “WBD Merger Agreement”) under which Paramount will acquire WBD (the “WBD Merger”). The closing of the WBD Merger is expected to close by the end of the third quarter of 2026, subject to customary closing conditions, including regulatory clearances. The anticipated closing of the WBD Merger has been delayed as a result of a lawsuit, with the parties agreeing to postpone closing until the earlier of five days following the court’s ruling or June 1, 2027.

Under the terms of the WBD Merger Agreement, Paramount will pay $31.00 per WBD share to acquire all outstanding shares of WBD, which at the time of the WBD Merger Agreement represented an equity value of $80.9 billion, and will assume WBD’s net debt. At DecemberMarch 31, 2025,2026, WBD’s debt (excluding finance leases) was comprised of $17.8$17.7 billion of senior notes and $15.0 billion of borrowings from a bridge facility,facility. whichFurthermore, we expect to refinance withif the debtWBD commitmentsMerger discussedcloses, below.Paramount Furthermore,will pay WBD stockholders a per share “ticking fee” of $0.00277778 will be paid upon closing by Paramount to WBD stockholders for everyeach day after September 30, 2026 that the WBD Merger ishas not closed past September 30, 2026,closed, up to a maximum of $0.25 per WBD share per 90 calendar day period.period Also(the “Ticking Consideration”). No Ticking Consideration is payable if the WBD Merger Agreement is terminated pursuant to its terms. The WBD Merger Agreement has a termination date of March 4, 2027, subject to one automatic extension to June 4, 2027. Also, under the terms of the WBD Merger Agreement, in the first quarter of 20262026, Paramount paid a termination fee of $2.8 billion to Netflix, Inc. (“Netflix”) on behalf of WBD in connection with the termination of a prior merger agreement between Netflix and WBD. This payment was initially funded with cash on hand and a $2.15 billion borrowing from our credit facility (see Capital Structure) and, in accordance with the Subscription Agreements described below, entered into by the Ellison Parties (as defined below), such amount will ultimately be funded by the $46.7 billion to be received from the Ellison Parties.

If the WBD Merger Agreement is terminated because the WBD Merger cannot close due to a failure to obtain antitrust or regulatory approvalapproval, foror because a court order prevents the WBD Merger isfrom notclosing received,on antitrust grounds, Paramount will owe WBD a $7.0 billion terminationRegulatory fee.Termination Fee (as defined in the WBD Merger Agreement). In accordance with the Subscription Agreements, this termination fee and the previously paid $2.8 billion Netflix termination fee described above would be funded by the Ellison Parties in exchange for shares of Paramount Skydance Corporation Class B Common Stock (as defined below) at $16.02 per share.

Due to the pushdown of the Ultimate Parent’s basis, which resulted in a new basis of accounting, the results of operations, financial position and cash flows are not comparable between the Successor and Predecessor periods. Accordingly, our consolidated financial statements and footnote disclosures are presented in distinct periods. The periods prior to the closing of the Skydance Transactions and the NAI Transaction include only Paramount Global and are identified as “Predecessor,” and the periods beginning on August 7, 2025 reflect Paramount Skydance Corporation and are identified as “Successor.” In addition, we are required to present segment information for the Predecessor period based on our previous segments, Filmed Entertainment, Direct-to-Consumer, and TV Media.

•Consolidated Results of Operations—Analysis of our results on a consolidated basis for the three and six months ended MarchJune 31,30, 2026 (Successor), including a comparison to the three and six months ended MarchJune 31,30, 2025 (Predecessor).

•Segment Results of Operations—Analysis of our results on a reportable segment basis for the three and six months ended MarchJune 31,30, 2026 (Successor).

•Liquidity and Capital Resources—Discussion of our cash flows, including sources and uses of cash, for the threesix months ended MarchJune 31,30, 2026 (Successor), including a comparison to the threesix months ended MarchJune 31,30, 2025 (Predecessor), and of our outstanding debt as of MarchJune 31,30, 2026 (Successor), including Supplemental Guarantor Financial Information.

Operational Highlights - Three Months Ended MarchJune 31,30, 2026 and 2025

Revenues increased 2%1% to $7.35$6.91 billion, principally reflecting growth at Paramount+ and higher licensing revenues, reflectingdriven by the inclusion of Skydance and increases in therevenues currentfrom year,secondary market licensing and content produced for third parties. These increases were partially offset by lower revenues from our linear networks.networks and from theatrical releases, reflecting the comparison to the second quarter 2025 release of Mission: Impossible - The Final

Operating income of $616$475 million for the three months ended MarchJune 31,30, 2026 increased 12%,19%. drivenOperating byincome thein impact2026 fromincludes costtransaction-related savingsitems initiativesof $153 million and restructuring charges of $35 million while 2025 includes restructuring charges and transaction-related items totaling $181 million and an impairment charge of $157 million. The comparison also reflects higher revenue and lower content costs, including from reductions in programming assets resulting from the pushdown of the Ultimate Parent’s basis, partially offset by amortization of intangible assets. Operating income in 2026 also includes transaction-related costs of $103 million while 2025 includes restructuring charges and transaction-related items totaling $85 million and gain on dispositions totaling $35 million.

Net earnings attributable to Parent of $168$41 million, or $.15$.04 per diluted share increaseddecreased 11%28% compared with net earnings attributable to Parent of $152$57 million, or $.22$.08 per diluted share, for the same prior-year period.period as the increase in operating income was more than offset by a higher tax provision and higher interest expense. Adjusted net earnings attributable to ParentParent, increasedwhich 34%excludes the restructuring charges, transaction-related items, and impairment charges noted above, decreased 35% to $261$205 million, or $.23$.18 per diluted share from $195$315 million, or $.29$.46 per diluted share, reflecting higher tax-effected operating income.share. The decreasedecreases in diluted EPS and adjusted diluted EPS reflectsalso reflect shares issued in connection with the Skydance Transactions and the NAI Transaction. See Reconciliation of Non-GAAP Measures for the definition of adjusted net earnings attributable to Parent and a reconciliation to net earnings attributable to Parent.

Adjusted EBITDA grew 59%27% primarily reflecting lower compensation and marketing costs as a result of cost savings initiatives, andthe lower content costs, includingcosts from reductions in programming assets resulting from the pushdown of the Ultimate Parent’s basis.basis and cost savings for our linear programming, partially offset by lower revenues from our linear networks. See Reconciliation of Non-GAAP Measures for the definition of adjustedAdjusted EBITDA and a reconciliation to net earnings attributable to Parent, the most directly comparable financial measure in accordance with U.S. GAAP.

We use these adjusted measures to, among other things, evaluate our operating performance. These measures are among the primary measures used by management for planning and forecasting of future periods, and they are important indicators of our operational strength and business performance. In addition, we use Adjusted EBITDA to, among other things, value prospective acquisitions. We believe these measures are relevant and useful for investors because they allowsallow investors to view our performance in a manner consistent with the method used by our management; and because they exclude items that are not representative of our normal operations, they provide a clearer perspective on underlying performance, and make it easier for investors, analysts and peers to compare our operating performance to other companies in the industry and to compare our results across reporting periods.

(a) PrimarilyReflects reflectsseverance charges for the impairment of lease assets,costs, as further described under Restructuring and Transaction-Related Items.

(b) ReflectsPrincipally reflects legal, advisory, and other professional fees relatingassociated towith the Skydanceplanned Transactions.WBD Merger and related integration.

(dc) The reported effective income tax rate for the three months ended MarchJune 31,30, 20252026 was 29.9%55.8% and the adjusted effective income tax rate, which is calculated as the adjusted provision for income taxes of $107$144 million divided by adjusted earnings before income taxes of $384$403 million, was 27.9%.35.7%. These adjusted measures exclude the items affecting comparability detailed above.