Shares of PSKY sat nearly flat at $11.79 as Warner Bros. Discovery shareholders gathered this morning for the most consequential vote in Hollywood in a generation. WBD shareholders are set to receive $31.00 per share in cash — a 147% premium to the unaffected stock price of $12.54. Approval is widely expected. The question for PSKY investors isn't whether the deal passes — it's whether the company survives the bill.
The Biggest Leveraged Buyout in History Rests on a Mountain of Debt
The new company will carry approximately $79 billion in long-term debt.
This is effectively the largest leveraged buyout ever, with roughly $87 billion in gross debt and estimated leverage of about 7x projected 2026 earnings before interest, taxes, and other charges.
Fitch Ratings has already downgraded PSKY to junk status, citing "competitive pressures" and warning that leverage "may remain outside negative rating sensitivities longer than we anticipated." For shareholders, junk-rated debt means higher borrowing costs that eat directly into future cash available for content spending and dividends.
Regulators, Not Shareholders, Hold the Real Veto
The UK's Competition and Markets Authority is already preparing to investigate, though history shows media mega-mergers typically pass with significant concessions rather than outright blocks.
Canada's Competition Bureau has also opened a review.
If the deal isn't finalized by September 30, 2026, PSKY must pay WBD shareholders an extra $0.25 per share each quarter — roughly $650 million per quarter — a ticking clock that punishes delay.
Gulf Sovereign Wealth Funds Are Bankrolling the Gamble
Saudi Arabia's Public Investment Fund, plus Qatar and Abu Dhabi sovereign funds, are collectively investing close to $24 billion in equity.
Paramount has also syndicated its bridge loan across 18 banks, reducing commitments from $54 billion to $49 billion. That diversifies risk but doesn't eliminate it — the combined entity must generate massive cash flow to service its obligations while competing against Netflix, Disney, and Amazon, all of whom carry far less debt relative to earnings.
PSKY's Stock Tells You the Market Isn't Celebrating
At $11.79, PSKY trades at a price-to-sales ratio of just 0.42 — significantly below the industry average — and earnings per share remain negative at -$0.22.
Analysts' consensus rating is "Sell," with a 12-month target of only $12.92. The market is pricing in execution risk: can David Ellison merge two sprawling media empires, slash costs fast enough to deleverage, and still produce enough hit content to keep subscribers from leaving? Today's vote is the easy part. The hard part starts tomorrow.