Paramount Skydance Corp

Management’s discussion and analysis of the results of operations and financial condition of Paramount Skydance

Corporation should be read in conjunction with the more detailed financial statements and notes thereto included in

our Form 8-K filed with the Securities and Exchange Commission on May 13, 2026, which was filed in order to

recast the financial statements included in our Annual Report on Form 10-Kfor the year ended December 31, 2025

to reflect our new segment presentation. References to “Paramount,” the “Company,” “we,” “us” and “our” refer to

Paramount Skydance Corporation and its consolidated subsidiaries, unless the context otherwise requires.

Warner Bros. Discovery Merger—On February 27, 2026, Paramount and Warner Bros. Discovery, Inc. (“WBD”)

announced a definitive merger agreement (the “WBD Merger Agreement”) under which Paramount will acquire

WBD (the “WBD Merger”). The closing of the WBD Merger is subject to customary closing conditions, including

regulatory clearances. The anticipated closing of the WBD Merger has been delayed as a result of a lawsuit, with

the parties agreeing to postpone closing until the earlier of five days following the court’s ruling or June 1, 2027.

The completion of the WBD Merger remains subject to regulatory clearance in certain jurisdictions. Recent

approvals include the European Commission in July 2026 under both the EU Merger Regulation and EU Foreign

Subsidies Regulation following a Phase 1 review.

Under the terms of the WBD Merger Agreement, Paramount will pay$31.00 per WBD share to acquire all

outstanding shares of WBD, which at the time of the WBD Merger Agreement represented an equity value of

$80.9 billion, and will assume WBD’s net debt. At March 31, 2026, WBD’s debt (excluding finance leases) was

comprised of$17.7 billion of senior notes and$15.0 billion of borrowings from a bridge facility. Furthermore, if

the WBD Merger closes, Paramount will pay WBD stockholders a per share “ticking fee” of$0.00277778 for each

day after September 30, 2026 that the WBD Merger has not closed, up to a maximum of$0.25 per WBD share per

90 calendar day period (the “Ticking Consideration”). No Ticking Consideration is payable if the WBD Merger

Agreement is terminated pursuant to its terms. The WBD Merger Agreement has a termination date of March 4,

2027, subject to one automatic extension to June 4, 2027. Also, under the terms of the WBD Merger Agreement, in

the first quarter of 2026, Paramount paid a termination fee of$2.8 billion to Netflix, Inc. (“Netflix”) on behalf of

WBD in connection with the termination of a prior merger agreement between Netflix and WBD. This payment

was initially funded with cash on hand and a $2.15 billion borrowing from our credit facility (see Capital

Structure) and, in accordance with the Subscription Agreements described below, entered into by the Ellison

Parties (as defined below), such amount will ultimately be funded by the $46.7 billion to be received from the

Ellison Parties.

If the WBD Merger Agreement is terminated because the WBD Merger cannot close due to a failure to obtain

antitrust or regulatory approval, or because a court order prevents the WBD Merger from closing on antitrust

grounds, Paramount will owe WBD a $7.0 billion Regulatory Termination Fee (as defined in the WBD Merger

Agreement). In accordance with the Subscription Agreements, this termination fee and the previously paid $2.8

billion Netflix termination fee described above would be funded by the Ellison Parties in exchange for shares of

Paramount Skydance Corporation Class B Common Stock (as defined below) at $16.02 per share.

WBD will owe Paramount a $3.0 billion termination fee under certain circumstances, including if WBD terminates

the WBD Merger Agreement to enter into a definitive agreement for an alternative acquisition proposal.

Concurrent with the execution of the WBD Merger Agreement (i) The Lawrence J. Ellison Revocable Trust, u/a/d

1/22/88, as amended (the “Trust”), and Lawrence J. Ellison (together with the Trust, the “Ellison Parties”) and (ii)

RedBird Capital Partners Fund IV (Master), L.P. (“RedBird” and, together with the Trust, the “Equity Investors”)

entered into subscription agreements (collectively, the “Subscription Agreements”) providing for a private

placement investment in Class B common stock of Paramount Skydance Corporation (“Paramount Skydance

Corporation Class B Common Stock”), for an aggregate amount of up to$46.7 billion (subject to increase if the

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