David Ellison moved mountains and fought off many detractors in his quest to acquire Warner Bros. Discovery. Now, as the transition is set to formally close on Oct. 6, the high-wire act is about to begin.
\n\nThe enlarged entity, to be known as Skydance, will carry a nearly unprecedented level of debt for a large media M&A transaction — a nearly $80 billion chunk — and that leverage will weigh on virtually every decision the company makes over the next three years. By comparison, when Discovery bought WarnerMedia from AT&T, it assumed $43 billion of AT&T’s debt, leaving the new WBD with about $53 billion in gross debt as of June 2022.
\n\nSkydance has a tight runway through the end of 2029 to significantly pare down the long-term debt on the company’s books. If Skydance doesn’t hit some very specific targets laid out in its agreements with lenders for reducing its overall leverage ratio, Larry Ellison, the software billionaire and the father of the Skydance CEO, will be on the hook to make up the difference out of his personal wealth.
\n\nAnalysts from three major credit ratings agencies — Moody’s Ratings, S&P Global Ratings and Fitch Solutions’ CreditSights — say…
Original source: https://variety.com/