Judge Clears Paramount's $111 Billion Warner Bros Deal as Wall Street Prices in 'Total Larry Ellison Risk'

Since BlackRock's Larry Fink pitched a $10 trillion AI buildout this week funded partly through retirement accounts, the single name tying together Hollywood's biggest merger and Silicon Valley's biggest debt binge is Larry Ellison.

U.S. District Judge Araceli Martínez-Olguín signed off on a settlement Wednesday ending the antitrust lawsuit that California Attorney General Rob Bonta and 11 other state attorneys general filed in July against Paramount Skydance's acquisition of Warner Bros. Discovery, according to the Los Angeles Times. The ruling clears the way for CEO David Ellison to finalize what the paper puts at a $111 billion deal, with 24/7 Wall St. pegging the transaction value at around $110 billion including assumed debt. Paramount is targeting an October 7 close.

The Debt Stack

Getting there required Paramount to raise roughly $44.4 billion in senior secured notes on September 28, part of a $52 billion financing package that also includes a $7.5 billion term loan, according to 24/7 Wall St. The combined company will carry close to $80 billion in debt once the deal closes, with S&P Global Ratings estimating leverage near 7.6 times EBITDA through 2027. S&P cut Paramount's rating to BB from BB+ on September 24.

The 10-year high-yield portion of that debt was marketed in the low 9% range, 24/7 Wall St reported, well above the 5.17% yield on 10-year Treasuries at the time. That's an expensive bill for a media company still absorbing a merger.

Oracle's Parallel Problem

Larry Ellison and his family trust guaranteed roughly $47 billion of the equity financing behind his son's acquisition, according to Bloomberg. The elder Ellison has separately pledged to help bring down Paramount's leverage if needed, a commitment credit graders read as a tacit promise of more capital down the road.

The trouble is Ellison's own fortune is tied up in Oracle, which has debt problems of its own. Oracle's long-term debt stood above $117 billion as of its most recent reporting, up 43% year over year, and S&P has downgraded the company to one notch above junk status, according to The American Prospect. Oracle notified its New Mexico data center developer, Blue Owl Capital, that it would miss payments on an $18 billion project, citing "force majeure" over delayed permits and local protests, the Prospect reported. Courts have historically been skeptical of force-majeure claims tied to permitting delays rather than wars or disasters, though no litigation over this specific claim has been filed as of this writing.

Oracle shares are down roughly 50% over the past year, according to the Prospect. Bloomberg and HeadTopics both report Ellison's personal fortune has fallen by nearly $200 billion from its peak, though he remains worth about $192 billion and still owns roughly 40% of Oracle. He canceled a planned stock sale last month and increased the number of Oracle shares pledged as collateral for personal loans.

Wellington Management portfolio manager Campe Goodman told Bloomberg that credit-default-swap pricing on Oracle and Paramount debt has started moving in lockstep, a sign bond investors are no longer treating the two as separate credits. "You have to consider your total Larry Ellison risk," Goodman said.

Foreign Money, Foreign Objections

On September 17, the FCC voted to waive the 25% cap on foreign ownership of U.S. broadcast licenses, allowing individual foreign investors to hold up to 20% equity in the combined company, according to the Epoch Times. The agency said the FCC's deal structure gives those investors no voting shares and no influence over Paramount's content or management decisions. Even so, the Epoch Times reports Middle Eastern investors could end up owning about 85% of total equity, including a 15.1% stake for Saudi Arabia's Public Investment Fund, with sovereign wealth funds overall holding 38.5%.

Democratic FCC Commissioner Anna Gomez objected publicly, writing on X that the commission "just let some of the most repressive governments in the world indirectly control nearly all of a combined Paramount-Warner Bros." This raises legitimate national-security and editorial-independence concerns given the scale of the stakes involved. Paramount's counter, backed by the FCC's own order, is that the foreign capital carries zero voting rights and zero governance role, with the Ellison family and RedBird Capital Partners holding 100% of voting shares. No regulatory body has alleged the foreign investors have exercised or attempted to exercise editorial influence.

The Settlement's Fine Print

The consent decree approved by Judge Martínez-Olguín requires the combined company to release at least 30 films theatrically each year, commit an additional $1.5 billion to domestic production, and set aside $47.5 million for workers displaced by the merger, according to the Los Angeles Times. It also creates a five-member panel to monitor editorial independence at CBS News and CNN, though the Times notes critics point out the Ellisons control board appointments, which undercuts the panel's independence by design. Paramount cannot sell or close its Melrose Avenue or Burbank lots for at least five years.

Inside CNN, Breitbart reported anonymous staffers describing the newsroom mood as "like a funeral," with one unnamed executive predicting a "bloodbath" once cost-cutting begins. Paramount has publicly targeted at least $6 billion in savings post-merger, which typically translates into job cuts, though the company has not announced specific CNN layoff numbers. CNN chief Mark Thompson held a staff town hall to address the anxiety, according to the New York Post reporting cited by Breitbart.

What Comes Next

Paramount's merger agreement includes a ticking fee of about $7 million a day for every day the deal doesn't close before October, according to 24/7 Wall St. Today is October 3. If the close slips to the targeted October 7 date, that's roughly $42 million in extra fees Paramount will have paid Warner Bros. Discovery shareholders simply for the delay, on top of an $80 billion debt load that two separate bond analysts now describe as inseparable from the financial health of a struggling Oracle.