On May 30, Paramount Skydance Corp. sat across from a room of lenders it needed to convince. The target: $110 billion in debt financing for its audacious takeover of Warner Bros. Discovery Inc. The pitch: stretched terms, stretched multiples, stretched patience.
Paramount Skydance, the entity formed by David Ellison's Skydance Media and Paramount Global, is no stranger to ambition. The $110 billion price tag—including assumed debt—makes this the largest media LBO in history. The debt syndication, however, is hitting a wall.
Leverage on the deal is pushing 7x EBITDA, per sources familiar with the terms. That is a full turn above the 6x ceiling most institutional lenders set for media credits. The spread: 450 basis points over SOFR on the senior secured tranche, with a 200 bps floor.
Bank syndication desks are struggling to place the paper. The senior secured piece, $65 billion, is the bulk. The junior tranche, $45 billion, carries a 650 bps spread and a 250 bps floor. Both are pricing wide of comparable credits.
Warner Bros. Discovery's own debt trades at 300 bps over Treasuries on its 2031 bonds. The new LBO paper is pricing 150 bps wider. That is a signal: the market is demanding a premium for the leverage and the execution risk.
The structure includes a $15 billion bridge loan to cover the gap until asset sales close. Paramount Skydance plans to sell Warner's CNN, HBO Latin America, and a portion of its studio lot in Burbank. The timeline: 18 months. The risk: asset values in media are falling.
CBRE's latest media and entertainment report shows studio lot values down 12% year-over-year. CNN's linear cable revenue dropped 8% in Q1 2026. The asset sale plan assumes a market that is not cooperating.
Lender pushback is mounting. A syndicate of six banks—JPMorgan, Goldman Sachs, Bank of America, Morgan Stanley, Citigroup, and Wells Fargo—are holding $20 billion each in commitments. They are now sub-underwriting to institutional investors. The take-up rate: below 60% on the senior tranche.
The banks are offering a 50 bps fee to investors who commit early. That is double the standard 25 bps for investment-grade LBOs. It is a sign of desperation, not confidence.
This deal is a stress test for the leveraged loan market. The broader syndicated loan market has tightened since the regional banking crisis of 2023. CLO issuance is down 15% year-to-date. The investor base for large LBOs is shrinking.
Paramount Skydance is pulling every lever: extending maturities, offering step-up coupons, and including a 1% ticking fee on undrawn commitments. The message: we will pay for patience. The question: is patience for sale?
The outcome will set a precedent. If this deal clears, it opens the door for more mega-LBOs at 7x leverage. If it stalls, it signals the end of the cheap-debt era for media. The market is watching.
On May 30, the lenders left the room without a commitment. The syndication deadline is June 15. The clock is ticking. The next move belongs to the banks.