Paramount Skydance Corp

Current report

Risks Relating to the WBD Merger

Current report

The proposed WBD Merger may cause disruption in our and WBD’s business and commercial relationships.

Current report

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.

Current report

The pursuit of the WBD Merger and the preparation for the integration of WBD may place a significant burden on our management and internal resources. The diversion of management’s attention away from day-to-day business concerns and any difficulties encountered in the transition and integration process could adversely affect our business, financial condition or results of operations.

Current report

Failure to consummate the WBD Merger could negatively impact our business, financial condition, results of operations and stock price.

Current report

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. 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.”

Current report

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. If WBD or Paramount is required to divest assets or businesses, there can be no assurance that we or WBD

Current report

-68- will be able to negotiate such 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 result in the abandonment of the WBD Merger. If the conditions to completion of the WBD Merger are not satisfied or waived, we may be unable to complete the WBD Merger in the timeframe or manner currently anticipated or at all.

Current report

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).

Current report

Additionally, if the WBD Merger is not completed, our ongoing business may be adversely affected and we will be subject to several risks or consequences, including:

Current report

•we may be required, under certain circumstances, to pay WBD the Regulatory Termination Fee (as defined in the WBD Merger Agreement);

Current report

•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 fees; or

Current report

•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.

Current report

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 not materially 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.

Current report

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, the WBD Merger may be prevented or delayed or the anticipated benefits of the WBD Merger could be reduced.

Current report

The Closing is conditioned upon, among other things, the clearance or approval by various regulatory authorities in the United States and other jurisdictions. 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. 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.

Current report

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.

Current report

The WBD Merger is subject to a number of Closing conditions and, if these conditions are not satisfied or waived (to the extent permitted by law), the WBD Merger may not be consummated. These conditions include: (i) the expiration of certain mandatory waiting periods or receipt of certain other clearances or affirmative approvals of certain governmental bodies, agencies or authorities and (ii) the absence of any law or order, issued by a court or governmental entity of competent jurisdiction, restraining, enjoining, prohibiting or preventing the consummation of the WBD Merger. Each of WBD’s and Paramount’s obligations to consummate the WBD Merger is also subject to certain other conditions, including, among others, the compliance with pre-closing covenants by and the accuracy of the representations and warranties of WBD (on the part of Paramount), on the one hand, and Paramount and Merger Sub (as defined in the WBD Merger Agreement) (on the part of WBD), on the other hand (in each case, subject to certain qualifications). Paramount’s obligation to consummate the WBD Merger is also subject to (x) the absence of certain changes that have had, or would reasonably be expected to have, a material adverse effect with respect to the Streaming and Studios segments of WBD and (y) WBD not having completed the separation of its Streaming and Studios business from its Global Linear Networks business nor having declared or made any dividend to WBD’s stockholders to effectuate such separation. These Closing conditions may not be fulfilled and, accordingly, the WBD Merger may not be consummated.

Current report

Additionally, the WBD Merger Agreement may be terminated by either Paramount or WBD (i) by mutual written consent, (ii) if any governmental entity of competent jurisdiction issues, enacts, enforces or enters any order permanently enjoining or prohibiting the consummation of the WBD Merger, and such order becomes final and non-appealable, or (iii) subject to certain limitations, if the Effective Time (as defined in the WBD Merger Agreement) has not occurred on or before 11:59 p.m., Eastern time, on March 4, 2027 (the “End Date”), subject to one automatic extension to June 4, 2027 if on such date all of the Closing conditions, except those related to regulatory approvals and governmental orders, have been satisfied or waived. In addition, (x) the WBD Merger Agreement may be terminated by Paramount due to certain breaches by WBD of its representations, warranties and covenants contained in the WBD Merger Agreement, subject to certain cure rights and (y) the WBD Merger Agreement may be terminated by WBD due to certain breaches by Paramount of its representations, warranties and covenants contained in the WBD Merger Agreement, subject to certain cure rights.

Current report

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

Current report

In connection with the WBD Merger, it is possible that WBD stockholders may file putative class action lawsuits against WBD or its Board of Directors. Paramount could also be named as a defendant to such litigation. Among other remedies, WBD stockholders could seek damages and/or to enjoin the WBD Merger. The outcome of any litigation is uncertain, and any such potential lawsuits could prevent or delay the Closing and/or result in substantial costs to WBD and Paramount. Any such actions may create uncertainty relating to the WBD Merger and may be costly and distracting to management of WBD and Paramount. Further, the defense or settlement of any lawsuit or claim that remains unresolved at the time the WBD Merger is completed may involve significant costs and may otherwise adversely affect our business, financial condition or results of operations.

Current report

In addition, federal, state, and/or foreign governmental authorities could initiate one or more enforcement actions challenging the WBD Merger. Any such actions could delay or prevent the Closing, or result in the imposition of burdensome conditions that could adversely affect the post-close entity.

Current report

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.

Current report

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. 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.

Current report

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.

Current report

The difficulties of combining the operations of Paramount and WBD include, among others:

Current report

•the diversion of management attention to integration matters;

Current report

•difficulties in integrating operations and systems, including administrative, human resources and information technology infrastructure, financial reporting and internal control systems and intellectual property and communications systems;

Current report

•challenges in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the two companies;

Current report

•difficulties in integrating employees and attracting and retaining key personnel, including talent;

Current report

•challenges in retaining existing, and obtaining new customers, viewers, subscribers, suppliers, distributors, licensors, lessors, employees, business associates, advertisers, creative talent and others;

Current report

•difficulties in achieving anticipated cost savings, synergies, accretion targets, business opportunities, financing plans and growth prospects from the combination;

Current report

•difficulties in managing the expanded operations of a significantly larger and more complex combined company;

Current report

•the costs of servicing the increased indebtedness and interest expense of the combined company resulting from the WBD Merger and the related financing transactions;

Current report

•challenges in continuing to develop valuable and widely-accepted content and technologies;

Current report

•contingent liabilities that are larger than expected; and

Current report

•potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with the WBD Merger.

Current report

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. 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.

Current report

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

Current report

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.