Skydance Corp

1)DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business— Skydance Corporation is a global media and entertainment company. Prior to the WBD

Merger in October 2026 (as defined and described below), and throughout the period covered by these financial

statements, our portfolio of brands included Paramount, Paramount+, Pluto TV, CBS, CBS Sports, Nickelodeon,

MTV, BET, and Comedy Central. Following the WBD Merger our portfolio also includes Warner Bros., HBO and

HBO Max, CNN, TNT Sports, Cartoon Network, Food Network, and HGTV. Beginning in 2026, we transitioned

our reporting structure into three new segments: Studios, Direct-to-Consumer, and TV Media (see Note 14).

Warner Bros. Discovery Merger (Subsequent Event)—On October 6, 2026 (the “Closing Date”), we completed the

acquisition (the “WBD Merger”) of Warner Bros. Discovery, Inc. (“WBD”) pursuant to the previously announced

definitive merger agreement (the “WBD Merger Agreement”). See Notes 2,8 and 11. Also on October 6, 2026, in

connection with the WBD Merger, we amended our certificate of incorporation (the “charter amendment”) to,

among other things, change our name from Paramount Skydance Corporation to Skydance Corporation. References

herein to “Skydance,” “Skydance Corporation” or the “Company” refer, prior to such charter amendment, to

Paramount Skydance Corporation, and following such charter amendment to Skydance Corporation, unless the

context otherwise requires reference to Paramount Skydance Corporation. Effective October 6, 2026, shares of

Skydance Corporation Class B Common Stock trade on the New York Stock Exchange (“NYSE”) under the

trading symbol “SKYD.”

The NAI Transaction and the Skydance Transactions—On August 7, 2025, pursuant to a purchase and sale

agreement dated July 7, 2024, certain affiliates of investors in Skydance Media, LLC (“Skydance Media”),

comprised of entities controlled by the Ellison Family (as defined below) and affiliates of RedBird Capital Partners

(collectively the “NAI Equity Investors”), purchased all of the outstanding equity interests of Paramount Global’s

controlling stockholder, National Amusements, Inc. (“NAI”) from the shareholders of NAI (the “NAI

Transaction”). Also on August 7, 2025, following the completion of the NAI Transaction and pursuant to the

Transaction Agreement dated as of July 7, 2024, Paramount Global and Skydance Media became wholly-owned

subsidiaries of Paramount Skydance Corporation (the transactions contemplated by the Transaction Agreement, the

“Skydance Transactions”). Paramount Skydance Corporation, formerly known as New Pluto Global, Inc. and now

known as Skydance Corporation, was formed on June 3, 2024 to consummate the Skydance Transactions and was

a wholly-owned direct subsidiary of Paramount Global until, through a series of mergers, it became the holding

company of Paramount Global and Skydance Media as part of the Skydance Transactions. See Note 3.

Following the closing of the Skydance Transactions and the NAI Transaction, NAI, which was renamed Harbor

Lights Entertainment, Inc., and its subsidiaries hold 100.0% of the Skydance Corporation Class A Common Stock.

Holders of shares of Class A common stock of Skydance Corporation (“Skydance Corporation Class A Common

Stock”) are entitled toone vote per share with respect to all matters on which the holders of Skydance Corporation

common stock are entitled to vote. Holders of Skydance Corporation Class B Common Stock do not have voting

rights. Accordingly, entities controlled by the Ellison Family (as defined below) indirectly hold approximately

77.5% of Skydance Corporation Class A Common Stock through their collective approximate 77.5% ownership

interest in Harbor Lights Entertainment, Inc., and as a result the Ellison Family is the controlling stockholder and

the ultimate parent of the Company (“Ultimate Parent”). For the purpose of determining the controlling ownership

of the Company, the Ellison family is comprised of Lawrence J. Ellison and David Ellison (the “Ellison Family”).

David Ellison is the son of Lawrence J. Ellison, and Lawrence J. Ellison and David Ellison are accordingly

considered immediate family members.

Pushdown of Ultimate Parent’s Basis—At the time Paramount Global and Skydance Media became subsidiaries of

Paramount Skydance Corporation, the Ellison Family controlled both Paramount Global and Skydance Media, and

as a result, this transaction has been accounted for as a transaction between entities under common control. As a

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transaction between entities under common control, the net assets were combined at the Ultimate Parent’s basis,

which for Paramount Global was deemed to be the estimated fair value as of August 7, 2025, the date of the

closing of the NAI Transaction, which was the point at which the Ellison Family obtained control of Paramount

Global (see Note 3). As a result, the net assets of Paramount Global were recorded at their fair values as of this

date. Since the net assets of Skydance Media were already at the Ultimate Parent’s basis, no adjustment to the fair

value of net assets was necessary, and Skydance Media was combined with Paramount Global’s net assets at the

Ultimate Parent’s basis as of this date.

Due to the pushdown of the Ultimate Parent’s basis, which resulted in a new basis of accounting, the results of

operations, financial position and cash flows are not comparable between the Successor and Predecessor periods.

Accordingly, our consolidated financial statements and footnote disclosures are presented in distinct periods. The

periods prior to the closing of the Skydance Transactions and the NAI Transaction include only Paramount Global

and are identified as “Predecessor,” and the periods beginning on August 7, 2025 reflect Skydance Corporation and

are identified as “Successor.” In addition, we are required to present segment information for the Predecessor

period based on our reportable segments prior to the segment change in 2026, Filmed Entertainment, Direct-to-

Consumer, and TV Media (see Note 14).

Basis of Presentation—The accompanying unaudited consolidated financial statements have been prepared on a

basis consistent with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”) for

interim financial information and pursuant to the rules of the Securities and Exchange Commission. These

financial statements 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-K for the year ended

December 31, 2025 to reflect our new segment presentation.

In the opinion of management, the accompanying unaudited consolidated financial statements reflect all

adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of our financial

position, results of operations and cash flows for the periods presented. Certain previously reported amounts have

been reclassified to conform to the current presentation.

Use of Estimates—The preparation of our consolidated financial statements in conformity with U.S. GAAP

requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and

liabilities, the disclosures of contingent assets and liabilities as of the date of the financial statements and the

reported amounts of revenues and expenses during the periods presented. We base our estimates on historical

experience and on various other assumptions that are believed to be reasonable under the circumstances, the results

of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily

apparent from other sources. Actual results may vary from these estimates under different assumptions or

conditions.

Net Earnings (Loss) per Common Share—Basic net earnings (loss) per share (“EPS”) is based upon net earnings

(loss) available to common stockholders divided by the weighted average number of common shares outstanding

during the period. Weighted average shares for diluted EPS reflect the effect of the assumed exercise of stock

options and warrants, and vesting of restricted share units (“RSUs”) or performance share units only in the periods

in which such effect would have been dilutive.

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The table below presents stock options, RSUs, and warrants excluded from the calculations of diluted EPS because

their inclusion would have been antidilutive.

The table below presents a reconciliation of weighted average shares used in the calculation of basic and diluted

EPS.

Accounting Pronouncements Not Yet Adopted

Disaggregation of Income Statement Expenses

In November 2024, the Financial Accounting Standards Board (“FASB”) issued guidance requiring disclosure in

the notes to the financial statements of the disaggregation of relevant expense captions on the income statement

into specified expense categories, including employee compensation, as well as disclosure of total selling expenses.

The guidance is effective for us for the year ending December 31, 2027, and for all interim and annual periods

thereafter, and may be applied either prospectively or retrospectively.

Internal-use Software Costs

In September 2025, the FASB issued updated guidance on the recognition and disclosure of internal-use software

costs. This guidance eliminates capitalization based on software development stages and requires that

capitalization of internal-use software development costs begin when (1) management has authorized and

committed to funding the software project and (2) it is probable the project will be completed and the software will

be used to perform its intended function. The guidance is effective for us for the year ending December 31, 2028,

including interim periods within that year, and may be adopted prospectively, retrospectively, or using a modified

transition approach for projects in process. We are currently evaluating the impact of this guidance on our

consolidated financial statements.

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2)SUBSEQUENT EVENT: ACQUISITION OF WARNER BROS. DISCOVERY

On October 6, 2026, pursuant to the WBD Merger Agreement we completed the acquisition of WBD. Under the

terms of the WBD Merger Agreement, we paid$31.00 per WBD share to acquire all outstanding shares of WBD

plus a per share “ticking fee” of$0.00277778 (the “Ticking Consideration”) multiplied by the number of calendar

days elapsed after September 30, 2026 to and including the Closing Date (together, the “Merger Consideration”).

Through a combination of equity and debt financing, total cash paid to WBD stockholders for common stock

outstanding was approximately$77.95 billion. In addition, purchase consideration includes approximately

$1.95 billion (inclusive of Ticking Consideration)related to the portion of WBD equity awards granted under any

WBD stock plan attributable to pre-combination services. Also, under the terms of the WBD Merger Agreement, in

the first quarter of 2026, we 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. The termination fee is

included in the total purchase consideration, and accordingly has been included within “Advance consideration for

WBD acquisition” on the Consolidated Balance Sheet as of September 30, 2026 and within Investing Activities on

the Consolidated Statement of Cash Flows for the nine months ended September 30, 2026. This payment was

initially funded with cash on hand and a$2.15 billion borrowing from our previous credit facility (see Note 8). In

accordance with the Subscription Agreements described below, entered into by the Ellison Parties (as defined

below), such amount was funded at closing by the Ellison Parties in exchange for shares of Skydance Corporation

Class B Common Stock at$12.00 per share. In addition, on the Closing Date we repaid WBD’s outstanding term

loans totaling$14.7 billion. The following table details the preliminary purchase consideration for the WBD

Merger.

(a) The estimated preliminary purchase consideration does not include an estimate for amounts relating to the settlement

of pre-existing relationships between WBD and Skydance.

The WBD Merger is being accounted for as a business combination, with Skydance identified as the accounting

acquirer. In identifying Skydance as the accounting acquirer, management considered the structure of the

acquisition and other actions contemplated by the WBD Merger Agreement, relative outstanding voting and equity

interests, and the composition of the post-acquisition board of directors. No single factor was the sole determinant

in the overall conclusion that Skydance is the accounting acquirer; rather all factors were considered in arriving at

such conclusion. As a result of the limited time between the Closing Date and the filing of this Quarterly Report on

Form 10-Q for the quarter ended September 30, 2026, initial accounting for the business combination is incomplete

and we are not yet able to disclose the provisional amounts to be recognized as of the acquisition date for assets

acquired and liabilities assumed, or the supplemental pro forma revenue and earnings of the combined company.

Wewill provide these disclosures in our Annual Report on Form 10-K for the year ended December 31, 2026.

States Consent Decree

On September 30, 2026, the Consent Decree (the “States Consent Decree”) amongst the Company, WBD and

twelve states (collectively, the “Plaintiff States”) went into effect in connection with resolving the lawsuit filed by

the Plaintiff States captioned State of California et al. v. Paramount Skydance Corp. et al., and modifying the no-

close order in order to permit the WBD Merger to close. Under the States Consent Decree, the combined company

and its subsidiaries following the WBD Merger must comply with certain principal commitments during afive-

year commitment period. See Note 15, Litigation Relating to the WBD Merger.

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Equity Financing

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 Skydance Corporation, for an aggregate amount of up to

$46.7 billion plus Ticking Consideration and certain other additional amounts as defined in the WBD Merger

Agreement, if required, from the Trust and$250 million from RedBird pursuant to the terms of the Subscription

Agreements (the “PIPE Transaction”).

In April 2026, we announced that the Equity Investors had determined, as permitted under the Subscription

Agreements, to assign their subscription rights thereunder (such assignments, including subsequent assignments

permitted under the Subscription Agreements up to the date of the closing of the WBD Merger, the “Equity

Syndication” and the assignees, the “Equity Syndication Parties”) to the Equity Syndication Parties in the full

amount of the commitments under the Subscription Agreements. The Equity Syndication Parties include affiliates

of the Ellison Parties and RedBird, as well as the following institutional investors: The Public Investment Fund,

L’Imad 1st SPV 2 Exempt RSC LTD (an investment vehicle of L’Imad Holding, an Abu Dhabi sovereign wealth

fund), QIA TMT Holding LLC (an investment vehicle of the Qatar Investment Authority), and LionTree

Investment Fund, L.P. See Note 6 for details of ownership by the Ellison Family and RedBird of Skydance

Corporation Class B Common Stock following the WBD Merger.

At closing of the WBD Merger, we issued to each Equity Syndication Party a number of newly issued nonvoting

shares of Skydance Corporation Class B Common Stock equal to its allocated amount divided by the Syndication

Purchase Price, defined as the 20-trading-day daily volume-weighted average price of Skydance Corporation Class

B Common Stock determined as of the third business day prior to the closing of the WBD Merger, subject to a

ceiling of$16.02 per share and a floor of$12.00 per share. Based on the Syndication Purchase Price of$12.00 per

share, we issued an aggregate amount of 3,918 million shares of Skydance Corporation Class B Common Stock to

the Equity Syndication Parties. Following the closing, the Ellison Family and RedBird remained the sole holders of

Skydance Corporation Class A Common Stock through their ownership interest in Harbor Lights Entertainment,

Inc., representing 100% of the voting shares of Skydance.

Debt Financing

In addition, in April 2026 we entered into a credit agreement (the “Pro Rata Credit Agreement”), which was

subject to the consummation of the acquisition of WBD. The Pro Rata Credit Agreement provides for (i)

$2.50 billion three-year senior secured term A loans, (ii)$2.50 billion five-year senior secured term A loans and

(iii) a$5.00 billion five-year senior secured revolving credit facility, which will be used for general corporate

purposes, and replaced our previous revolving credit facility upon the closing of the WBD Merger (see Note 8).

We also entered into$49 billion 364-day senior secured bridge term loan commitments. The bridge commitments,

which were terminated on the Closing Date, were intended as contingent financing and no borrowings were made

in connection with the WBD Merger. In lieu of the bridge commitments, permanent debt financing for the

acquisition was comprised of (i)$9.5 billion ofseven-year Term B-1 Loans, (ii)$30.0 billion of First Lien Senior

Secured Notes, (iii)$12.4 billion of Second Lien Senior Secured Notes, and (iv) the$5.0 billion of term A loans

described above, reflecting an aggregate amount of$56.9 billion. See Note 8. The availability and initial funding of

the bridge commitments were subject to the consummation of the acquisition of WBD and other customary

conditions. On the Closing Date we incurred facility fees associated with the bridge facility totaling$384 million,

which will be reported within interest expense on our consolidated statement of operations in the fourth quarter of

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Exchange Offers and Tender Offers

In connection with the WBD Merger, in May 2026, we commenced (i) offers to exchange any and all of certain

outstanding senior notes of subsidiaries of WBD (the “WBD Issuers”) for newly issued second lien secured notes

issued by Skydance (the “Exchange Offers”) and (ii) offers to purchase for cashtwo additional series of senior

notes of the WBD Issuers (the “Tender Offers”). The Exchange Offers and Tender Offers expired on October 6,

2026, following the closing of the WBD Merger, and settled on October 9, 2026, resulting in the exchange of

$11.98 billion aggregate principal amount and€546.5 million ofthe WBD Issuers’ senior notes for newly issued

second lien senior secured Skydance notes, and the purchase for cash of$2.4 billion aggregate principal amount of

the WBD Issuers’ senior notes. See Note 8.

Warrants

In addition, on October 13, 2026, holders of record of Skydance Corporation Class B Common Stock on October

5, 2026 (excluding any Equity Investor or affiliate thereof, any of the Company’s wholly owned subsidiaries that

own Class B Common Stock, the Paramount Global 401(k) Plan and the Paramount Global Master Trust) received

one 10-year warrant per share, exercisable at$12.00 per share. See Note 11.

Treatment of WBD Equity Awards

In accordance with the WBD Merger Agreement, on October 6, 2026 (i) vested WBD stock options and RSUs

were cancelled and converted into the right to receive cash based on the Merger Consideration; (ii) unvested WBD

stock options with an exercise price below the Merger Consideration, unvested WBD RSUs and WBD deferred

stock units were assumed by the Company and converted into contingent rights to receive fixed cash amounts

based on the Merger Consideration, which remain subject to the vesting and other terms of the original awards; (iii)

WBD stock options with an exercise price equal to or greater than the Merger Consideration were cancelled for no

consideration; and (iv) WBD notional investment units under WBD’s deferred compensation plans were converted

into notional units with respect to Skydance Corporation Class B Common Stock. As discussed above, the

preliminary purchase consideration includes an estimate of approximately$1.95 billion for WBD equity awards,

comprised of amounts paid for vested awards and liabilities assumed for the portion of the converted unvested

awards attributable to pre-combination services. The remaining estimated value of the converted unvested awards

of approximately$1.18 billion will be recognized as compensation expense over the remaining vesting periods of

up tothree years.

In connection with the WBD Merger, we assumed WBD’s equity incentive plans, and shares remaining available

under WBD’s stock incentive plan may be used for awards to legacy WBD employees and newly hired employees

under our 2025 Incentive Award Plan, as amended.

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3. THE SKYDANCE AND NAI TRANSACTIONS

On August 7, 2025, pursuant to a purchase and sale agreement dated July 7, 2024 the NAI Equity Investors

purchased all of the outstanding equity interests of Paramount Global’s controlling stockholder, NAI, from the

shareholders of NAI in the NAI Transaction. Also on August 7, 2025, following the completion of the NAI

Transaction and pursuant to the Transaction Agreement dated as of July 7, 2024, Paramount Global and Skydance

Media became wholly-owned subsidiaries of Paramount Skydance Corporation in the Skydance Transactions.

Paramount Skydance Corporation, formerly known as New Pluto Global, Inc., and now named Skydance

Corporation, was formed on June 3, 2024 to consummate the Skydance Transactions and was a wholly-owned

direct subsidiary of Paramount Global until, through a series of mergers, it became the holding company of

Paramount Global and Skydance Media as part of the Skydance Transactions.

Concurrent with the NAI Transaction, the NAI Equity Investors and certain other affiliates of investors in

Skydance Media made an investment of$6.0 billion into Paramount Skydance Corporation (the “Skydance

Transactions PIPE”) in exchange for 400 million newly issued shares of Paramount Skydance Corporation Class B

Common Stock for a purchase price of$15.00 per share, and the NAI Equity Investors also received warrants to

purchase 200 million shares of Paramount Skydance Corporation Class B Common Stock at an initial exercise

price of$30.50 per share (subject to customary anti-dilution adjustments), which expire five years after issuance

(the “Skydance Transactions Warrants”).$4.45 billion of the Skydance Transactions PIPE investment was used to

fund the cash-stock election discussed below and$1.52 billion of cash was provided to the Company.

The Skydance Transactions also included: (1)a transaction pursuant to which each outstanding Skydance Media

membership unit held by Skydance Media investors and each Skydance Media Phantom Unit was converted into

the right to receive the applicable portion of 316.7 million shares of Paramount Skydance Corporation Class B

Common Stock (313.8 million shares after reduction in connection with certain tax withholding requirements), and

(2) a cash-stock election offered to holders of Paramount Global common stock pursuant to which (a) shares of

Paramount Global Class A Common Stock held by stockholders other than NAI or its subsidiaries were converted,

at the stockholders’ election, into the right to receive either$23.00 in cash (“Class A Cash Consideration”) or

1.5333 shares of Paramount Skydance Corporation Class B Common Stock (“Class A Stock Consideration”), and

(b) shares of Paramount Global Class B Common Stock held by stockholders other than NAI or its subsidiaries, the

NAI Equity Investors and certain other affiliates of investors in Skydance Media referred to above were converted,

at the stockholders’ election, into the right to receive either$15.00 in cash (“Class B Cash Consideration”), subject

to proration, orone share of Paramount Skydance Corporation Class B Common Stock (“Class B Stock

Consideration”). The shares of Paramount Global Class A Common Stock held by NAI and its subsidiaries

converted into shares of Class A common stock, par value$0.001 per share. Shares of Paramount Global Class A

Common Stock for which elections to receive Class A Cash Consideration or Class A Stock Consideration were

not made or were validly revoked were automatically converted into Class A Stock Consideration. Shares of

Paramount Global Class B Common Stock for which elections to receive Class B Cash Consideration were not

made or were validly revoked were converted automatically into one share of Paramount Skydance Corporation

Class B Common Stock. See Note 11.

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Pushdown of the Ultimate Parent’s Basis

The NAI Transaction resulted in a change in control of our Predecessor, Paramount Global, that established a new

accounting basis, which reflects the estimated fair value of Paramount Global as indicated by the NAI Transaction

and the Skydance Transactions. The table below presents the calculation of the Ultimate Parent’s basis in

Paramount Global as of the date these transactions closed.

(a)In the NAI Transaction, the NAI Equity Investors purchased all of the outstanding equity interests of NAI. Based on

valuation analyses of NAI’s assets and liabilities, the estimated value attributable to the shares of Paramount Global

common stock held by NAI and its subsidiaries is$2.1 billion. This amount increased$107 million from the preliminary

estimate included in our Quarterly Report on Form 10-Q for the third quarter of 2025, which resulted in an increase in

Paramount Global’s basis in this amount.

(b)Reflects cash paid to holders of Paramount Global Class A Common Stock and Paramount Global Class B Common

Stock who elected to receive the Class A Cash Consideration and Class B Cash Consideration of$23.00 per share and

$15.00 per share, respectively, in the Skydance Transactions. Such payout was funded by the$6.0 billion Skydance

Transactions PIPE.

(c) Reflects the fair value of outstanding Paramount Global RSU Awards and Paramount Global PSU Awards attributable to

employees’ service prior to the Skydance Transactions and the NAI Transaction. The fair value is based on the closing

stock price of Paramount Global Class B Common Stock on August 6, 2025 of$11.04 per share. The remaining fair

value of outstanding Paramount Global RSU Awards and Paramount Global PSU Awards, which were assumed by

Paramount Skydance Corporation and converted into awards of restricted stock units covering an equivalent number of

shares of Paramount Skydance Corporation Class B Common Stock are being expensed over their remaining vesting

periods.

(d) Reflects 318.8 million shares of Paramount Skydance Corporation Class B Common Stock owned by holders of

Paramount Global Class A and Paramount Global Class B Common Stock following the Skydance Transactions, other

than those held directly or indirectly by NAI or its affiliates, not converted into cash, valued at the closing stock price of

Paramount Global Class B Common Stock on August 6, 2025 of$11.04 per share. Certain holders of Paramount Global

Class A Common Stock received the Class A Stock Consideration, which resulted in the conversion of 2.0 million shares

of Paramount Global Class A Common Stock into approximately 3.1 million shares of Paramount Skydance Corporation

Class B Common Stock, based on the exchange ratio ofone share of Paramount Global Class A Common Stock to

1.5333 shares of Paramount Skydance Corporation Class B Common Stock.

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The table below details the estimated fair values of Paramount Global’s assets, liabilities and noncontrolling

interests at the Ultimate Parent’s basis as of August 7, 2025, including measurement period adjustments recorded

subsequent to the third quarter of 2025. The impact on our statement of operations in 2026 from the amounts that

would have been recognized in the third quarter of 2025 had these measurement period adjustments been

recognized as of the acquisition date was not material. The fair values were determined based on valuation

techniques that use unobservable inputs (Level 3 in the fair value hierarchy). Significant judgments in these

valuations include long-term projections, discount rates, royalty rates, and decay rates.

(a) The fair value was determined based on the market approach, which estimates the value based on transactions in the market for

comparable assets, or the cost approach, which estimates the value based on the amount required to replace the asset. The fair

value reflects an increase to the book value of$635 million principally reflecting incremental fair value of Paramount Global’s

owned land and buildings.

(b) The fair value was determined based on the income approach, including the multi-period excess earnings method, which

estimates the cash flows generated by the asset over its economic life using a discounted cash flow analysis. For certain content,

fair value was determined to be equivalent to net book value. The fair value reflects a net decrease to the book value of

programming assets of$653 million principally from reductions for programming at our TV Media and Direct-to-Consumer

segments offset by an increase to the fair value of our film and television libraries.

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(c) Goodwill relates principally to the Direct-to-Consumer segment and represents the difference between Paramount Global’s basis

and the fair value of its net assets based on thefair value estimates assumed herein. Goodwill reflects operating synergies

between our businesses, as well as anticipated cost savings and is not deductible for tax purposes. During the first and second

quarters of 2026, in connection with the finalization of our appraisals and other valuation analyses, we recorded measurement

period adjustments that resulted in increases to goodwill of$22 million and$411 million, respectively. These adjustments

principally resulted from increases during the year-to-date period of$257 million to programming obligations and$196 million

to contingent liabilities, and a decrease of$91 million to programming assets, partially offset by the related deferred tax impact of

$140 million.

(d)The table below presents the fair values of intangible assets by asset class, as well as the valuation method used to determine the

estimated fair values, and the related estimated weighted average useful lives. The weighted average useful life of the total

intangibles below is 16.6 years.

(e) The fair value was determined based on quoted prices in active markets.

(f) The fair value was determined based on a remeasurement of the obligation using actuarial assumptions. Key valuation inputs

included discount rates and mortality assumptions.

(g)“Programming Obligations” include $777 million recorded to establish liabilities for unfavorable contractual arrangements.

(h) The estimated fair value of Paramount Global’s contingent liabilities as of August 7, 2025 was$1.6 billion, which relates to the

defense and settlement of lawsuits claiming various personal injuries related to exposure to asbestos as well as claims from

federal and state environmental regulatory agencies and other entities asserting liability for environmental cleanup costs and

related damages (see Claims Related to Former Businesses in Note 15) and other legal contingencies.

(i) The fair value was determined based on a discounted cash flow analysis.

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4)PROGRAMMING AND OTHER INVENTORY

The following table presents our programming and other inventory at September 30, 2026 and December 31, 2025,

grouped by type and predominant monetization strategy.

The following table presents amortization of our television and film programming and production costs, which is

included within “Operating expenses” on the Consolidated Statements of Operations.

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5)RESTRUCTURING AND TRANSACTION-RELATED ITEMS

During the periods presented, we recorded the following within “Restructuring and transaction-related items” on

the Consolidated Statements of Operations.

(a) Severance costs include the accelerated vesting of stock-based compensation.

Restructuring Charges

During thethree and nine months ended September 30, 2026 (Successor) and the period from August 7 -

September 30, 2025 (Successor), we recorded restructuring severance costs of$50 million,$85 million and$185

million, respectively, primarily associated with changes in management and actions to align the business around

our strategic priorities following the Skydance Transactions, including costs related to a plan under which

severance payments are being provided to certain eligible employees who voluntarily elected to participate. In

addition, during the three months ended September 30, 2026 werecorded exit costs of$39 million associated with

a contract termination.

Restructuring charges for the Predecessor periods from July 1 - August 6, 2025 and January 1 - August 6, 2025

included severance costs of$13 million and$190 million, respectively, primarily associated with strategic changes

in our global workforce in order to streamline our organization. In addition, during the Predecessor period from

January 1 - August 6, 2025, we recorded exit costs of$65 million, primarily for the impairment of lease assets that

we ceased use of in connection with initiatives to reduce our real estate footprint. The impairments were primarily

the result of a decline in market conditions since the inception of these leases and reflect the difference between the

estimated fair values, which were determined based on the expected future cash flows of the lease assets, and the

carrying values.

The following is a rollforward of our restructuring liability, which is recorded in “Other current liabilities” and

“Other liabilities” on the Consolidated Balance Sheets, and is expected to be substantially paid by the end of 2027.

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(a) Excludes stock-based compensation expense of$36 million.

Transaction-Related Items

Transaction-related items include costs directly associated with prospective and completed mergers and

acquisitions, as well as related integration activities. During thethree and nine months ended September 30, 2026,

we recorded transaction-related costs of$98 million and$354 million, respectively, principally for legal, advisory,

and other professional fees associated with the planned WBD Merger and related integration. During the

Predecessor periods from July 1 - August 6, 2025 and January 1 - August 6, 2025, we recorded transaction-related

costs of$175 million and$199 million, respectively, principally for banking, legal, advisory, and other

professional fees relating to the Skydance Transactions, and transaction awards that became payable to eligible

employees upon closing.

6)RELATED PARTIES

The Ellison Family (Successor)

At September 30, 2026, the Ellison Family, the controlling stockholder of the Company, indirectly held

approximately 77.5% of our voting Class A Common Stock through their collective approximate 77.5% ownership

interest in Harbor Lights Entertainment, Inc. (f/k/a National Amusements, Inc.) and 47.1% of our Class A and non-

voting Class B Common Stock on a combined basis. On October 6, 2026, in connection with the WBD Merger, the

Ellison Family contributed$14.85 billion of equity financing (see Note 2) and received 1.24 billion shares of

Skydance Corporation Class B Common Stock. Following the WBD Merger, on October 6, 2026, the Ellison

Family’s Class A holdings were unchanged, and they held 35.0% of our Class A and non-voting Class B Common

Stock on a combined basis. In addition, in connection with the Skydance Transactions PIPE, the NAI Equity

Investors (including entities controlled by the Ellison Family)received the Skydance Transactions Warrants to

purchase a total of 200 million shares of Skydance Corporation Class B Common Stock (of which entities

controlled by the Ellison Family received warrants to purchase a total of 155 million shares) at an initial exercise

price of$30.50 per share (subject to customary anti-dilution adjustments), which expire five years after issuance.

The Ellison Family is comprised of Lawrence J. Ellison and David Ellison. David Ellison is the son of Lawrence J.

Ellison, and Lawrence J. Ellison and David Ellison are accordingly considered immediate family members. David

Ellison is CEO of the Company and the Chairman of our Board of Directors.

Lawrence J. Ellison is the Chairman and a significant stockholder of Oracle Corporation (“Oracle”). We have

several multi-year software-as-a-service agreements with Oracle, principally for finance and human resources, as

well as software support agreements and database licenses used by various applications. We made payments to

Oracle totaling$2 million and$48 million during thethree and nine months ended September 30, 2026,

respectively, and$2 million during the period from August 7 - September 30, 2025. In February 2026, we executed

asix-year cloud infrastructure services agreement with Oracle with a total commitment of$300 million, under

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which payments escalate over the term, in connection with our anticipated enterprise, data, and streaming

workloads.

In addition, we have a lease agreement with a term that expires in 2034 under which the lessor is an entity owned

and controlled by Lawrence J. Ellison. At September 30, 2026 and December 31, 2025, the total liability associated

with these leases was$163 million and$174 million, respectively. We recorded lease costs associated with these

leases totaling$8 million and$22 million during thethree and nine months ended September 30, 2026,

respectively, and$4 million during the period from August 7 - September 30, 2025.

The Ellison Family has investments in other entities over which they have control or can exert significant

influence, which as a result, are related parties to us. We did not have any material transactions with these entities.

RedBird (Successor)

At September 30, 2026, RedBird indirectly held approximately 22.5% of our voting Class A Common Stock

through their collective approximate 22.5% ownership interest in Harbor Lights Entertainment, Inc. and 10.6% of

our Class A and non-voting Class B Common Stock on a combined basis. On October 6, 2026, in connection with

the WBD Merger, RedBird contributed$5.2 billion of equity financing (see Note 2) and received 433 million

shares of Skydance Corporation Class B Common Stock. Following the WBD Merger, on October 6, 2026,

RedBird’s Class A holdings were unchanged, and they held 11.0% of our Class A and non-voting Class B

Common Stock on a combined basis.

In December 2025, RedBird BD LLC, an affiliate of RB Maverick LLC and RB Tentpole, was engaged as a

financial advisor to the Company in connection with the evaluation of the WBD Merger. Pursuant to the

agreement, RedBird BD LLC received an aggregate transaction fee of$110 million in October 2026, comprised of

$65 million for mergers and acquisitions advisory services and$45 million for capital raising advisory services.

In the second quarter of 2026, we entered into athree-year agreement with RedBird Development Group LLC

(“RedBird Development”), an affiliate of RedBird, for media strategy and operations transformation services

related to branded media initiatives. Under the agreement, RedBird Development is compensated through

structured quarterly commission fees, subject to an annual cap of$12 million per year plus reimbursable travel and

business expenses of up to$300,000 annually. At September 30, 2026, amounts owed in connection with this

contract totaled$3 million.

Reimbursements Associated with WBD Merger (Subsequent Event)

At closing of the WBD Merger, we reimbursed the Trust and RedBird for reasonable and documented out-of-

pocket expenses totaling$7 million.

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Other Related Parties

In the ordinary course of business, we are involved in transactions with our equity method investees, primarily for

the licensing of television and film programming. Revenue earned from an equity method investee was$71 million

and$218 million for thethree and nine months ended September 30, 2026 (Successor), respectively,$40 million

for the Successor period from August 7 - September 30, 2025, and$27 million and$191 million for the

Predecessor periods from July 1 - August 6, 2025 and January 1 - August 6, 2025, respectively. Receivables from

this equity method investee are included in “Receivables, net” and “Other assets” on the Consolidated Balance

Sheets. These totaled$190 million and$86 million, respectively, at September 30, 2026, and$201 million and$87

million, respectively, at December 31, 2025.

Through the normal course of business, we are involved in other transactions with related parties, including other

equity method investees, that have not been material in any of the periods presented.

7)REVENUES

The table below presents our revenues disaggregated into categories based on the nature of such revenues. See

Note 14 for revenues by segment disaggregated into these categories.

Receivables

Reserves for accounts receivable reflect our expected credit losses based on historical experience as well as current

and expected economic conditions and industry trends. At September 30, 2026 and December 31, 2025, our

allowance for credit losses was$17 million and$10 million, respectively.

Included in “Other assets” on the Consolidated Balance Sheets are noncurrent receivables of$772 million and

$835 million at September 30, 2026 and December 31, 2025, respectively. Noncurrent receivables primarily relate

to revenues recognized under long-term content licensing arrangements. Revenues from the licensing of content

are recognized at the beginning of the license period in which programs are made available to the licensee for

exhibition, while the related cash is generally collected over the term of the license period.

Contract Liabilities

Contract liabilities are included within “Deferred revenues” and “Other liabilities” on the Consolidated Balance

Sheets and were$1.5 billion at both September 30, 2026 and December 31, 2025. We recognized revenues of$1.1

billion,$0.4 billion, and$0.6 billion for thenine months ended September 30, 2026 (Successor) and for the periods

from August 7 - September 30, 2025 (Successor) and January 1 - August 6, 2025 (Predecessor), respectively, that

were included in the opening balance of deferred revenues for the respective year.

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Unrecognized Revenues Under Contract

At September 30, 2026, unrecognized revenues attributable to unsatisfied performance obligations under our long-

term contracts were approximately$6 billion, of which approximately $1 billion is expected to be recognized

during the remainder of 2026,$2 billion in 2027,$1 billion in 2028, and$1 billion thereafter. These amounts only

include contracts subject to a guaranteed fixed amount or the guaranteed minimum under variable contracts,

primarily consisting of television and film licensing contracts and affiliate agreements that are subject to a fixed or

guaranteed minimum fee. Such amounts change on a regular basis as we renew existing agreements or enter into

new agreements. In addition, the timing of satisfying certain performance obligations under these long-term

contracts is uncertain and, therefore, is also subject to change. Unrecognized revenues under contracts disclosed

above do not include (i) contracts with an original expected term of one year or less, mainly consisting of

advertising contracts, (ii) contracts for which variable consideration is determined based on the customer’s

subsequent sale or usage, mainly consisting of affiliate agreements and (iii) long-term licensing agreements for

multiple programs for which variable consideration is determined based on the value of the programs delivered to

the customer and our right to invoice corresponds with the value delivered.

Performance Obligations Satisfied in Previous Periods

Under certain revenue arrangements, the amount and timing of our revenue recognition is determined based on our

licensees’ subsequent sale to its end customers. As a result, under such arrangements we often satisfy our

performance obligation of delivery of our content in advance of revenue recognition. We recognized revenues of

$0.1 billion in each of the three months ended September 30, 2026 (Successor), the Successor period from August

7 - September 30, 2025 and the Predecessor period from July 1 - August 6, 2025 and$0.3 billion for thenine

months ended September 30, 2026 (Successor),$0.1 billion for the Successor period from August 7 - September

30, 2025 and$0.4 billion for the Predecessor period from January 1 - August 6, 2025, respectively, for which the

performance obligation was satisfied prior to the periods indicated. These revenues principally related to content

licensing arrangements, including agreements with distributors of transactional video-on-demand and electronic

sell-through services, other licensing arrangements, and theatrical distribution of our films.

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8)DEBT

At September 30, 2026 and December 31, 2025 ourdebt consisted of the following:

(a) In connection with the pushdown of the Ultimate Parent’s basis, our debt was recorded at fair value as of August 7, 2025,

which resulted in a net decrease to our total debt balance of$898 million, reflecting the reversal of a net unamortized

discount of$390 million and unamortized deferred financing fees of$71 million, and a reduction of$1.36 billion to

adjust our debt to its fair value (see Note 3). The adjustments to fair value for each of our senior and junior debt issuances

are being amortized over the remaining term of the applicable issuance within interest expense. At September 30, 2026

and December 31, 2025, the total netunamortized fair value adjustments for our senior and junior debt was$1.25 billion

and$1.32 billion, respectively. The face value of our total debt at September 30, 2026 and December 31, 2025 was

$16.29 billion (including unsecured credit facility borrowings discussed below) and$14.98 billion, respectively.

Senior Debt

In January 2026, we repaid our$347 million of 4.0% senior notes at maturity and in October 2026 we repaid our

$86 million of 3.70% senior notes at maturity.

Commercial Paper

At both September 30, 2026 and December 31, 2025, we hadno outstanding commercial paper borrowings.

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Unsecured Credit Facility

In April 2026, we entered into an amendment to our previous credit facility (the “Unsecured Credit Facility”),

increasing the commitments from$3.50 billion to$5.00 billion. The Unsecured Credit Facility was used for

general corporate purposes and to support commercial paper borrowings, if any and also allowed us to borrow, at

our option, in certain foreign currencies up to specified limits. In the first quarter of 2026, in connection with the

$2.8 billion termination fee paid to Netflix (see Note 2), we borrowed$2.15 billion under the Unsecured Credit

Facility. As of September 30, 2026, outstanding borrowings totaled$1.67 billion at a weighted average interest rate

of 5.83% and the remaining availability was$3.3 billion. On the Closing Date, in connection with the

consummation of the WBD Merger, we repaid allborrowings with the funding from the PIPE Transaction

described in Note 2 and terminated all credit commitments outstanding under the Unsecured Credit Facility.

The Unsecured Credit Facility had one principal financial covenant which set a maximum Consolidated Total

Leverage Ratio, which was the ratio of our Consolidated Indebtedness, net of a maximum of$3.0 billion of

unrestricted cash and cash equivalents at the end of a quarter, to our Consolidated EBITDA (each as defined in the

credit agreement for the Unsecured Credit Facility) for the trailing twelve-month period at the end of each quarter.

The maximum ratio was 4.50 x as of September 30, 2026 and we met the covenant.

Other Bank Borrowings

At both September 30, 2026 and December 31, 2025, there wereno outstanding bank borrowings under Miramax’s

$50 million credit facility that matures in November 2027.

Subsequent Events in Connection with the WBD Merger

$72.1 billion. This amount consists of (i)$56.9 billion of debt incurred to finance the WBD Merger, comprised of

$5.0 billion of borrowings under the Term A Loan Facilities and$9.5 billion of Term B-1 Loans, each under the

Pro Rata Credit Agreement,$30.0 billion of First Lien Senior Secured Notes (the “First Lien Notes”), and

$12.4 billion of Second Lien Senior Secured Notes (the “Second Lien Notes”), (ii)$12.6 billion of Second Lien

Senior Secured Notes issued in the Exchange Offers (the “Second Lien Exchange Notes”), and (iii)$2.7 billion of

other outstanding unsecured notes and debentures of the WBD Issuers that we assumed. The newly issued debt is

further discussed below.

Pro Rata Credit Agreement

The Pro Rata Credit Agreement provides for (i) a$5.00 billion five-year senior secured revolving credit facility

(the “Revolving Credit Facility”), (ii) a$2.5 billion three-year senior secured term loan A-1 facility and (iii) a

$2.5 billion five-year senior secured term loan A-2 facility (together, the “Term A Loan Facilities”). The

availability and initial funding of the facilities under the Pro Rata Credit Agreement were subject to the

consummation of the acquisition of WBD, the termination of the Unsecured Credit Facility, and other customary

conditions and no amounts were outstanding as of September 30, 2026.

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On the Closing Date, in connection with the completion of the WBD Merger, we borrowed the full$2.5 billion

under each of the Term A Loan Facilities. The commitments under the Revolving Credit Facility became available

on the Closing Date, and no amounts were drawn. Also on the Closing Date, we entered into Amendment No. 1 to

the Pro Rata Credit Agreement (“Credit Agreement Amendment No. 1”), which provided for a senior secured

incremental tranche of term B loans consisting of (i)$8.5 billion ofseven-year U.S. dollar-denominated term B-1

loans (the “Dollar Term B-1 Loans”) and (ii)€850 million ofseven-year euro-denominated term B-1 loans (the

“Euro Term B-1 Loans” and, together with the Dollar Term B-1 Loans, the “Term B-1 Loans”). We borrowed the

full amount of the Term B-1 Loans on the Closing Date. The Term B-1 Loans mature on the seventh anniversary of

the Closing Date.

The loans drawn under the Term A Loan Facilities and the Revolving Credit Facility bear interest at a rate

determined at the time of each borrowing and are generally based on either the prime rate in the U.S. or an

applicable benchmark rate plus a margin (based on Skydance’s corporate family rating), depending on the type and

tenor of the loans entered into. The benchmark rate for loans denominated in U.S. dollars is Term SOFR, and for

loans denominated in euros, sterling and yen is EURIBOR, SONIA and TIBOR, respectively.

The Dollar Term B-1 Loans bear interest, at our option, at a rate per annum equal to either the Alternate Base Rate

(as defined in the Pro Rata Credit Agreement) or Term SOFR plus a margin based on our Leverage Ratio that

ranges between 1.75% and 1.50% for Alternate Base Rate loans and 2.75% and 2.50% for Term SOFR Rate loans.

The Euro Term B-1 Loans bear interest at a rate per annum equal to EURIBOR plus a margin based on our

Leverage Ratio that ranges between 2.75% and 2.50%. Beginning with the quarter ending December 31, 2029, the

Dollar Term B-1 Loans will amortize at 1.00% of the initial principal amount per annum in quarterly installments,

with the remaining balance payable at maturity. No regular amortization is required with respect to the Euro Term

B-1 Loans.

Interest rates on benchmark rate borrowings under the Pro Rata Credit Agreement, including the Term A Loan

Facilities and the Term B-1 Loans, reset at the beginning of each interest period, and as a result, interest expense

on these borrowings will fluctuate with changes in market interest rates. In addition, the applicable margins may

change based on changes in our corporate family rating or the Leverage Ratio, as applicable.

The obligations under the Pro Rata Credit Agreement have been secured on a first lien basis on all or substantially

all of the assets of Skydance and its U.S. subsidiaries (including Paramount Global, Skydance Media, LLC, and

each of its respective U.S. subsidiaries) that are guarantors, excluding real property and subject to other customary

exceptionsand a cap on the amount of assets and property of Paramount Global that can be subject to a lien

securing the Pro Rata Credit Agreement. On the date Skydance achieves certain credit ratings and satisfies certain

other conditions as specified in the Pro Rata Credit Agreement (such date, the “Investment Grade Fall-Away

Date”), the obligations under the Pro Rata Credit Agreement will become unsecured, and the guarantee of such

obligations by the subsidiary guarantors will be released (subject to certain exceptions).

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Covenants

The Pro Rata Credit Agreement contains customary representations and warranties and also contains financial

covenants that require our Leverage Ratio and First Lien Net Leverage Ratio (eachas defined in the Pro Rata

Credit Agreement) not to exceed 5.50 x and 3.25 x, respectively, in each case, at the end of each fiscal quarter. On

and after the Investment Grade Fall-Away Date, the First Lien Net Leverage Ratio financial covenant will cease to

apply and the Leverage Ratio financial covenant will be modified requiring that our Leverage Ratio not exceed

4.50 x at the end of each fiscal quarter.

Optional Redemption

The loans under the Pro Rata Credit Agreement may be voluntarily prepaid, and unutilized commitments

thereunder may be voluntarily reduced, without penalty, other than customary breakage costs and, in the case of

the Term B-1 Loans, a 1.00% premium on Term B-1 Loans that are prepaid, converted or subjected to a pricing

reduction within six months after the Closing Date.

Senior Secured Notes

On October 5, 2026, we issued, in private placements exempt from registration under the Securities Act of 1933, as

amended (the “Securities Act”),$30.0 billion aggregate principal amount of First Lien Notes and$11.4 billion

aggregate principal amount of Second Lien Notes, together with€885 million aggregate principal amount of

Second Lien Notes denominated in euros (First Lien Notes together with the Second Lien Notes, the “Senior

Secured Notes”). The Senior Secured Notes bear interest at fixed rates, payable semi-annually in arrears, and

consist of the following:

(a) Translated at the spot rate at the time of pricing.

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The First Lien Notes are secured by first-priority liens on all orsubstantially all of the assets of Skydance and the

Guarantors (as defined below) (the “Collateral”), subject to permitted liens and certain exceptions. The First Lien

Notes are guaranteed on a senior secured basis by each of Skydance’s existing and future wholly owned domestic

subsidiaries that is a borrower under or guarantees obligations under the Pro Rata Credit Agreement (collectively,

the “Guarantors”), subject to certain exceptions. The Second Lien Notes are secured by second-priority liens on the

Collateral, subject to permitted liens and certain exceptions. The Second Lien Notes are guaranteed on a senior

secured basis by the Guarantors. Upon the occurrence of an Investment Grade Event (as defined in the applicable

supplemental indenture) for each series of notes with respect to the Senior Secured Notes, subject to certain

conditions (including the concurrent release of liens and guarantees securing other secured debt and the Company

having no greater than$250 million of term B loans outstanding at such time), the liens on the Collateral securing

such series of notes will be released and the note guarantees with respect to such series will be released. In

addition, certain covenants set forth in the applicable supplemental indenture relating to asset sales and future

subsidiary guarantors will cease to apply to such series of notes. These releases and covenant suspensions are

permanent and will not be reinstated upon any subsequent downgrade or withdrawal of the applicable investment

grade ratings.

Registration Rights

Pursuant to the registration rights agreement, dated as of October 5, 2026 (the “First Lien Senior Secured Notes

Registration Rights Agreement”), we have agreed to use commercially reasonable efforts to (i) file a registration

statement with respect to a registered offer to exchange each series of the First Lien Notes for new notes with terms

substantially identical in all material respects to such series of the First Lien Notes (such new notes, the “Exchange

Notes”) and cause the registration statement to be declared effective under the Securities Act within 730 days of

October 5, 2026, or (ii) in certain circumstances, file a shelf registration statement with respect to resales of the

First Lien Notes. The Second Lien Notes do not have any registration rights.

Optional Redemption and Change of Control Provisions

Each series of First Lien Notes may be redeemed at our option, in whole or in part, at a “make-whole” premium

prior to the applicable par call date and at 100% of principal on or after that date. For each series of First Lien

Notes, the par call date is withinone tosix months of maturity. For the Second Lien Notes, prior to October 15,

2028 (2031 Euro and 2031 Second Lien Notes), October 15, 2029 (2034 Second Lien Notes) and October 15, 2031

(2036 Second Lien Notes), we may redeem each series, in whole or in part, at a “make-whole” premium.

Thereafter each series of Second Lien Notes can be redeemed at call premiums starting at 3.500% to 4.563% of

principal and declining tozero one year prior to maturity (2031 Euro and 2031 Second Lien Notes) and three years

prior to maturity (2034 and 2036 Second Lien Notes). In addition, before October 15, 2028 (2031 Euro and 2031

Second Lien Notes) or October 15, 2029 (2034 and 2036 Second Lien Notes), we may redeem up to 40% of a

series of Second Lien Notes with the proceeds of equity offerings at 107.0% to 109.125% of principal, and up to

10% of such a series per calendar year at 103% of principal, plus in each case accrued and unpaid interest.

In addition, upon a change of control triggering event, holders of our Senior Secured Notes may require us to

repurchase their notes at 101% of principal plus accrued and unpaid interest.

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WBD Exchange Offers and Tender Offers

In May 2026, we commenced offers to exchange any and all of certain outstanding senior notes issued by the

WBD Issuers for Second Lien Exchange Notes newly issued by Skydance and also commenced offers to purchase

for cash two additional series of senior notes of the WBD Issuers. The Exchange Offers expired on October 6,

2026 following the closing of the WBD Merger, and holders of approximately 99.15% of the notes eligible to

participate in the Exchange Offers validly tendered their notes. Accordingly, upon settlement on October 9, 2026,

we issued to such holders$11.98 billion aggregate principal amount of dollar-denominated Second Lien Exchange

Notes and€546.5 million aggregate principal amount of euro-denominated Second Lien Exchange Notes. Such

notes were issued in private placements exempt from registration under the Securities Act. The dollar-denominated

notes pay interest semi-annually, and the euro-denominated notes pay interest annually, in each case in arrears. The

Second Lien Exchange Notes consist of the following:

The Exchange Offers have been accounted for as debt modifications. Accordingly, the Second Lien Exchange

Notes were recorded at the carrying amount of the exchanged WBD notes.

The Second Lien Exchange Notes are senior secured obligations, guaranteed by the Guarantors and secured by

second-priority liens on the Collateral. They are junior in lien priority to the First Lien Notes and the loans and

commitments under the Pro Rata Credit Agreement, and equal in lien priority to the Second Lien Notes.

The Second Lien Exchange Notes are redeemable at our option. Most series may be redeemed at a “make-whole”

price before their par call date, which is betweenone andsix months before maturity, and at 100% of principal on

or after that date, plus accrued and unpaid interest in each case. The 2032 Second Lien Exchange Notes and 2052

Second Lien Exchange Notes follow the same terms but cannot be redeemed before March 15, 2027. The 6.35%

2040,4.95% 2042, and 4.875% 2043 Second Lien Exchange Notes have no par call date and may be redeemed at

any time at a “make-whole” price. The euro-denominated Second Lien Exchange Notes may also be redeemed in

whole at par upon certain changes in U.S. tax law. The change of control, tender offer, covenant and Investment

Grade Event provisions of the Second Lien Exchange Notes are substantially the same as those of the Second Lien

Notes issued on October 5, 2026 described above. The Second Lien Exchange Notes do not have registration

rights.

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Concurrent with the Exchange Offers, on October 9, 2026 we purchased$2.40 billion in aggregate principal

amount of senior notes of the WBD Issuers (approximately 98.83% of the outstanding principal amount of those

series) for$2.38 billion in cash, plus accrued and unpaid interest, and the purchased notes were cancelled.

9)FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The carrying value of our financial instruments approximates fair value, except for notes and debentures. At

September 30, 2026 and December 31, 2025, the carrying value of our outstanding notes and debentures was

$13.38 billion and$13.65 billion, respectively, and the fair value, which is determined based on quoted prices in

active markets (Level 1 in the fair value hierarchy), was$11.1 billion and$13.2 billion, respectively.

Investments

Our investments without a readily determinable fair value for which we have no significant influence had a

carrying value of$55 million and$58 million at September 30, 2026 and December 31, 2025, respectively. These

investments are included in “Other assets” on the Consolidated Balance Sheets.

Foreign Exchange Contracts

We are exposed to changes in foreign currency exchange rates and manage that exposure principally using foreign

currency forward contracts and cross-currency swaps. We designate certain of these instruments as cash flow

hedges, fair value hedges and net investment hedges, as described below. Foreign currency forward contracts have

principally been used to manage our exposure to currencies such as the British pound, the euro, the Canadian dollar

and the Australian dollar. We designate forward contracts used to hedge committed and forecasted foreign

currency transactions, including for the production and licensing of content, as cash flow hedges. We also enter

into non-designated forward contracts to hedge non-U.S. dollar denominated assets, liabilities, and cash flows. The

maximum period we are hedging our exposure to variability in future cash flows is 4.4 years.

At September 30, 2026 and December 31, 2025, the notional amount of all foreign exchange contracts was$7.22

billion and$3.14 billion, respectively. At September 30, 2026, the notional amount comprised$5.70 billion related

to future production and licensing of content (designated as cash flow hedges),$1.00 billion related to the issuance

ofthe 2031 Euro Second Lien Notes (designated as fair value hedges) and$510 million related to our other foreign

currency assets and liabilities (non-designated hedges). At December 31, 2025, the notional amount comprised

$2.74 billion related to future production costs (designated as cash flow hedges) and$407 million related to our

foreign currency assets and liabilities (non-designated hedges).

On September 30, 2026, in connection with the pricing of the above-referenced€885 million ($1.00 billion)

aggregate principal amount of the 7.000% Euro Second Lien Senior Secured Notes due 2031, which were issued

on October 5, 2026, we entered into fixed-for-fixed cross-currency swaps with a notional amount of$1.00 billion.

The swaps, which mature on October 15, 2029, aredesignated as fair value hedges of the foreign currency

exposure associated with both the firm commitment to issue the notes from September 30, 2026 and the

subsequently issued notes.

Subsequent Event in Connection with WBD Merger

On October 6, 2026, concurrent with the borrowingof the€850 million Euro Term B-1 Loans (see Note 8), we

designated the principal amount of these loans as a hedge of our net investment in certain euro functional currency

subsidiaries.

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Interest Rate Contracts

In the second quarter of 2026, we entered into interest rate contracts with an aggregate notional amount of$10.0

billion in connection with anticipated debt issuances associated with the WBD Merger and future debt refinancing,

of which$3.0 billion were designated as cash flow hedges. These instruments were intended to hedge exposure to

changes in benchmark U.S. Treasury rates from the execution date of the agreements through the issuance of the

related debt. On September 30, 2026, we terminated all of these interest rate contractsand, in October 2026,

received cash proceeds of$667 million. For the contracts designated as cash flow hedges, the related gain of

$165 million, which was recorded in accumulated other comprehensive income (loss) (AOCI), will be reclassified

into interest expense over the 5-year and 10-year term of the related debt issued in October 2026. Approximately

$16 million is expected to be reclassified from AOCI into interest expense within the next 12 months. The gain on

the non-designated interest rate hedges for the nine months ended September 30, 2026 was$502 million.

Gains (Losses) on Derivative Financial Instruments

The table below presents gains (losses) recognized on cash flow hedges in “Cash Flow Hedges” inother

comprehensive income (loss) and on non-designated hedges within “Net gain on derivatives” on the Consolidated

Statements of Operations.

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Fair Value Measurements

The table below presents our assets and liabilities measured at fair value on a recurring basis at September 30,

2026 and December 31, 2025. These assets and liabilities have been categorized according to the three-level fair

value hierarchy established by the FASB, which prioritizes the inputs used in measuring fair value. Level 1 is

based on publicly quoted prices for the asset or liability in active markets. Level 2 is based on inputs that are

observable other than quoted market prices in active markets, such as quoted prices for the asset or liability in

inactive markets or quoted prices for similar assets or liabilities. Level 3 is based on unobservable inputs reflecting

our own assumptions about the assumptions that market participants would use in pricing the asset or liability. All

of our assets and liabilities that are measured at fair value on a recurring basis use Level 2 inputs. The fair value of

foreign currency hedges is determined based on the present value of future cash flows using observable inputs

including foreign currency exchange rates. The fair value of deferred compensation liabilities is determined based

on the fair value of the investments elected by employees.

Level 3 inputs were used in determining Paramount Global’s net assets at the Ultimate Parent’s basis (see Note 3)

and the estimated fair value of FCC licenses that were impaired in the second quarter of 2025 (see Note 16).

10)VARIABLE INTEREST ENTITIES

In the normal course of business, we enter into joint ventures or make investments with business partners that

support our underlying business strategy and provide us the ability to enter new markets to expand the reach of our

brands, develop new programming and/or distribute our existing content. In certain instances, an entity in which

we make an investment may qualify as a variable interest entity (“VIE”). In determining whether we are the

primary beneficiary of a VIE, we assess whether we have the power to direct matters that most significantly impact

the activities of the VIE, and have the obligation to absorb losses or the right to receive benefits from the VIE that

could potentially be significant to the VIE.

The following tables present the amounts recorded in our consolidated financial statements related to our

consolidated VIEs. During the first quarter of 2026, we acquired our minority partner’s interest in one of our

consolidated VIEs, which increased our ownership interest to 100%. Accordingly, for periods subsequent to the

acquisition, this entity is not included in the amounts disclosed.

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11)STOCKHOLDERS’ EQUITY

We are authorized to issue up to 55 million shares of Skydance Corporation Class A Common Stock, par value of

$.001 per share;100 million shares of preferred stock, par value of$.001 per share; and,7.0 billion shares of

Skydance Corporation Class B Common Stock, par value of$.001 per share, which increased from 5.50 billion

shares in April 2026. Holders of Class A Common Stock are entitled toone vote per share; holders of Class B

Common Stock haveno voting rights. No shares of preferred stock have been issued. The Certificate of

Amendment to the amended and restated certificate of incorporation that increased the Class B authorization also

permits the Skydance Corporation Board of Directors to declare and pay a dividend to holders of Skydance

Corporation Class B Common Stock without being required to declare and pay a corresponding dividend to the

holders of Skydance Corporation Class A Common Stock, subject to the prior written consent or approval of the

holders of all of the outstanding shares of Skydance Corporation Class A Common Stock.

As of September 30, 2026,31.5 million shares of Class A Common Stock,1,092.9 million shares of Class B

Common Stock and the Skydance Transactions Warrants to purchase 200 million shares of Class B Common Stock

at an exercise price of$30.50 per share were outstanding.

On October 6, 2026, subsequent to the balance sheet date, we issued approximately 3,918 million shares of Class B

Common Stock in connection with the WBD Merger and subsequently distributed warrants to purchase

approximately 470.7 million shares of Class B Common Stock at an exercise price of$12.00 per share to certain

holders of record of Class B Common Stock on October 5, 2026. The October 2026 common stock and warrant

issuances are further described below.

Impacts from the WBD Merger (Subsequent Event)

Common Stock

On October 6, 2026, pursuant to the Subscription Agreements and the Equity Syndication, we issued

approximately 3,918 million newly issued nonvoting shares of Skydance Corporation Class B Common Stock to

the Equity Syndication Parties at the Syndication Purchase Price of$12.00 per share for gross proceeds of

$47.01 billion (see Note 2).

Warrants

On October 13, 2026, each holder of Skydance Corporation Class B Common Stock (excluding any Equity

Investor or affiliate thereof, any of the Company’s wholly owned subsidiaries that own Class B Common Stock,

the Paramount Global 401(k) Plan and the Paramount Global Master Trust) as of the October 5, 2026 record date

received, without payment of any consideration, one 10-year warrant (each, a “Warrant”) for each share held,

exercisable at an initial exercise price of$12.00 per share and subject to customary anti-dilution and fundamental

change make-whole adjustments. Warrants issued totaled approximately 470.7 million. Beginning on the third

anniversary of issuance, we maydesignate an earlier expiration date for the Warrants if the closing price of our

Class B Common Stock equals or exceeds$30.00 for at least 20 trading days during any 30 consecutive trading

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day period. The Warrants commenced trading on the NYSE on October 13, 2026 separately from our Class B

Common Stock under the symbol “SKYD WS.”

In connection with the Warrant issuance, existing Skydance RSUs were equitably adjusted pursuant to pre-existing

anti-dilution provisions in Skydance equity plans.

Since the Warrants were only issued to certain holders of Skydance Corporation Class B Common Stock, the

estimated value of the Warrants is considered a deemed dividend, which results in the application of the two-class

method of EPS for the period the Warrants were issued. Accordingly, for the three months and year ending

December 31, 2026, earnings per share will be calculated separately for the holders of Skydance Corporation Class

B Common Stock receiving the deemed dividend and those not receiving the deemed dividend.

Impact from the Skydance Transactions

On August 6, 2025, each share of Paramount Global common stock that was owned by Paramount Global as

treasury stock was cancelled and ceased to exist, and each issued and outstanding share of Paramount Global Class

A Common Stock and Paramount Global Class B Common Stock was converted automatically into the right to

receiveone share of Paramount Skydance Corporation Class A Common Stock and Paramount Skydance

Corporation Class B Common Stock, respectively. Additionally, at the closing of the Skydance Transactions, all

outstanding Paramount Global RSU awards and PSU awards were converted to Paramount Skydance Corporation

RSU awards.

The Skydance Transactions included a cash-stock election offered to holders of Paramount Global common stock

pursuant to which (a) shares of Paramount Global Class A Common Stock held by stockholders other than NAI or

its subsidiaries were converted, at the stockholders’ election, into the right to receive either the Class A Cash

Consideration or the Class A Stock Consideration and (b) shares of Paramount Global Class B Common Stock held

by stockholders other than NAI or its subsidiaries, the NAI Equity Investors and certain other affiliates of investors

in Skydance Media were converted, at the stockholders’ election, into the right to receive the Class B Cash

Consideration (subject to proration) or the Class B Stock Consideration. The elections resulted in cash settlement

of 7.2 million shares of Paramount Global Class A Common Stock at a price of$23.00 per share and cash

settlement of 285.9 million shares of Paramount Global Class B Common Stock at a price of$15.00 per share for

which holders of the shares elected to receive the Class A Cash Consideration and Class B Cash Consideration,

respectively. In addition, holders of 2.0 million shares of Paramount Global Class A Common Stock elected to

receive the Class A Stock Consideration or made no election, and as such received shares of Paramount Skydance

Corporation Class B Common Stock at a conversion rate of 1.5333, resulting in the issuance of 3.1 million shares

of Paramount Skydance Corporation Class B Common Stock. Elections made for the Class B Cash Consideration

were subject to a proration mechanism. Shares of Paramount Global Class B Common Stock for which elections to

receive Class B Cash Consideration were not made or were validly revoked remained issued and outstanding as

one share of Paramount Skydance Corporation Class B Common Stock. Shares of Paramount Global Class A

Common Stock and Paramount Global Class B Common Stock were cancelled and ceased to exist upon

completion of the Skydance Transactions.

The cash elections were funded by$4.45 billion of the Skydance Transactions PIPE proceeds, and the remaining

$1.52 billion was provided to the Company. In exchange for these proceeds, the NAI Equity Investors and certain

other affiliates of investors in Skydance Media received 400 million newly issued shares of Paramount Skydance

Corporation Class B Common Stock for a purchase price of$15.00 per share, and the NAI Equity Investors also

received the Skydance Transactions Warrants for the purchase of 200 million shares of Paramount Skydance

Corporation Class B Common Stock at an initial exercise price of$30.50 per share (subject to customary anti-

dilution adjustments), which expire five years after issuance.

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In addition,316.7 million shares (313.8 million shares after reduction in connection with certain tax withholding

requirements) of Paramount Skydance Corporation Class B Common Stock were issued to holders of Skydance

Membership Units and Skydance Phantom Unit awards.

The table below details the activity described above and calculates shares of Paramount Skydance Corporation

Class A Common Stock and Class B Common Stock issued and outstanding after completion of the Skydance

Transactions on August 7, 2025.

Common Stock Dividends

The following table presents dividends declared per share and total dividends for Skydance Corporation Class A

and B Common Stock for the Successor periods and Paramount Global’s Class A and Class B Common Stock for

the Predecessor periods.

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Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes in the components of accumulated other comprehensive income

(loss).

(a) Reflects amortization of net actuarial losses (see Note 13).

The cash flow hedges included in other comprehensive income (loss) are net of a tax expense of$27 million for the

nine months ended September 30, 2026 (Successor) and tax expense of$2 million for the period from January 1 -

August 6, 2025 (Predecessor). The net actuarial loss and prior service cost related to pension and other

postretirement benefit plans included in other comprehensive income (loss) is net of a tax benefit of$8 million for

the period from January 1 - August 6, 2025 (Predecessor).

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12)INCOME TAXES

The income tax provision represents federal, state and local, and foreign taxes on earnings before income taxes and

equity in loss of investee companies. For thethree and nine months ended September 30, 2026 (Successor), we

recorded a provision for income taxes of$464 million and$739 million, reflecting an effective income tax rate of

74.1% and 59.9%, respectively. Included in the provision for income taxes are the following items identified as

affecting the comparability of our results, which in aggregate increased our effective income tax rate by 47.3

percentage points and 29.1 percentage points for their respective periods.

(a) Primarily attributable to the establishment of a reserve for uncertain tax positions discussed below.

On July 10, 2026, the Company received Notices of Proposed Adjustment (“NOPAs”) from the Internal Revenue

Service (“IRS”) for legacy Viacom Inc.’s 2017, 2018, and 2019 tax years regarding the tax treatment of certain

transactions between our subsidiaries. The Company disagrees with the proposed adjustments and is contesting

the NOPAs through the IRS’ administrative appeals process and, if necessary, through judicial proceedings.

While the uncertain tax position meets the more-likely-than-not recognition threshold, in applying the

measurement assessment, the Company currently believes that a portion of the benefit may not be realized upon

settlement and has recorded a reserve during the third quarter of 2026 for this item.

Our reserve for uncertain tax positions of$613 million at September 30, 2026 includes$537 million which

would affect our effective income tax rate, if and when recognized in future years. Liabilities for accrued interest

and penalties totaling$254 million as of September 30, 2026 are included within “Other current liabilities” and

“Other liabilities” on the Consolidated Balance Sheets.

For the period from August 7 - September 30, 2025 (Successor), we recorded a provision for income taxes of$85

million and for the periods from July 1 - August 6, 2025 and January 1 - August 6, 2025 (Predecessor), we

recorded a benefit from income taxes of$229 million and$79 million, respectively. The provision for income

taxes in the 2025 Successor period reflects the timing of foreign inclusions and foreign-derived intangible

income deductions between the Successor and Predecessor periods. The benefit from income taxes for the 2025

Predecessor periods reflects the tax impact of earnings attributable to noncontrolling interests, the timing of

foreign inclusions between the Successor and Predecessor periods, and the tax benefit on the foreign-derived

intangible income deduction.

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(a) On July 4, 2025, the U.S. government enacted tax legislation, which included the extension of certain expired or expiring tax

provisions, including a favorable change to the interest deduction limitation, and modifications to certain international tax provisions.

The legislation has multiple effective dates with certain provisions effective in 2025. A favorable change to the interest deduction

limitation resulted in the reversal of the valuation allowance on our interest limitation carryforward deferred tax asset of$114 million.

The net discrete tax benefits for the 2025 Predecessor periods reflect this reversal, partially offset by a reserve for uncertain tax

positions.

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13)PENSION AND OTHER POSTRETIREMENT BENEFITS

The following tables present the components of net periodic cost for our pension and postretirement benefit plans.

The service cost component of net periodic cost is presented on the Consolidated Statements of Operations within

operating income, and all other components of net periodic cost are included within “Other items, net.”

(a) Amounts reflect our domestic plans only.

(b) Reflects amounts reclassified from accumulated other comprehensive loss to net earnings (loss).

14)SEGMENT INFORMATION

The tables below set forth our financial information by reportable segment that is regularly reviewed by the

Company’s chief operating decision maker (“CODM”) as of and for the periods ended September 30, 2026, who is

the Company’s President, Andrew Brandon-Gordon. Beginning in 2026, we transitioned our reporting structure

into three new segments: Studios, Direct-to-Consumer, and TV Media. Under the new segment structure, our

Studios segment reflects the combination of the historical Filmed Entertainment segment with the historical TV

Media studio operations, consolidating our content creation activities. Additionally, our premium cable channel,

Paramount+ with Showtime, which was previously under the TV Media segment, is now managed under the

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Direct-to-Consumer segment. Concurrent with the change to our segments, we updated our segment expense

allocations to better reflect how we operate and make cost decisions across the business. Certain centralized costs

that were previously allocated at the segment level are now reported within corporate expenses.

As a result of the new accounting basis established in connection with the Skydance Transactions and NAI

Transaction on August 7, 2025, which makes our results of operations not comparable between the Successor and

Predecessor periods (see Note 1), we are required to present segment information for the periods prior to August 7,

2025 based on our previous segments, Filmed Entertainment, Direct-to-Consumer, and TV Media.

•Studios—Our Studios segment consists of our television and film studio operations, including CBS

Studios, Paramount Television Studios, Nickelodeon Animation, Paramount Pictures, Paramount

Animation, and Miramax, as well as Skydance Animation, Film, and Television, Paramount Sports

Entertainment and Paramount Games Studio. For the Predecessor period, our Filmed Entertainment

segment was most comparable to our new Studios segment and excluded studio operations related to our

TV Media businesses, including CBS Studios and Paramount Television Studios.

•Direct-to-Consumer—Our Direct-to-Consumer segment consists of our portfolio of domestic and

international pay and free streaming services, including Paramount+ and Pluto TV, as well as our domestic

premium cable network, Paramount+ with Showtime. For the Predecessor period, the Direct-to-Consumer

segment excluded Paramount+ with Showtime. During the second quarter of 2026, we integrated BET+

into Paramount+.

•TV Media—Our TV Media segment consists of our (1) broadcast operations—the CBS Television

Network, our domestic broadcast television network; CBS Stations, our owned television stations; and our

international free-to-air networks, including Network 10 and Channel 5; (2) domestic basic cable networks,

including MTV, Comedy Central, Paramount Network, The Smithsonian Channel, Nickelodeon, BET

Media Group, CBS Sports Network, and international extensions of certain of these brands; and (3) CBS

Media Ventures, which produces and distributes first-run syndicated programming. TV Media also

includes a number of digital properties such as CBS News 24/7 for 24-hour news and CBS Sports HQ for

sports news and analysis. For the Predecessor period, the TV Media segment also included domestic and

international television studio operations and the premium cable network, Paramount+ with Showtime.

In the first quarter of 2026, we also renamed our primary measure of profit and loss for our operating segments

from Adjusted OIBDA to Adjusted EBITDA. Although these measures have different starting points, as we define

them, they produce the same result. We define Adjusted EBITDA as net earnings (loss) attributable to Parent

before interest expense and income; provision for (benefit from) income taxes; other items; equity in earnings

(loss) of investee companies, net of tax; and depreciation and amortization, adjusted to exclude stock-based

compensation expense and certain items identified as affecting comparability that are not part of our normal

operations. We define Adjusted OIBDA as operating income before depreciation and amortization, adjusted to

exclude stock-based compensation expense and the same items identified as affecting comparability. This change

was made to align with the measure our management, including the CODM, began using in 2026, including for

planning and forecasting of future periods, evaluating the operating performance of our segments, and making

decisions about resource allocation. The items identified as affecting comparability that are excluded in both

measures include programming charges, impairment charges, restructuring charges, transaction-related items, other

corporate matters, and gain (loss) on dispositions, each where applicable. Stock-based compensation is a noncash

expense that management does not consider to be part of our underlying operating performance and is also

excluded in both measures.

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We do not disclose our assets by segment because they are not regularly provided to the CODM and are not used to

evaluate our operating performance or in determining the allocation of resources.

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For content licensed between segments, costs are allocated across segments based on the relative value of the

distribution windows within each segment; accordingly, no intersegment licensing revenues or profits are recorded

by the licensor segment. Under our previous segment presentation, revenues generated between segments were

principally from intersegment arrangements for the distribution of content, rental of studio space, and advertising,

as well as licensing revenues earned from third parties who license our content to our internal platforms either

through a sub-license or co-production arrangement. These transactions were recorded at market value as if the

sales were to third parties and eliminated in consolidation. Under our new segment presentation, intersegment

revenues are comprised of advertising revenues and licensing revenues earned from third parties who license our

content to our internal platforms through sub‑licensing or co‑production arrangements. For thethree and nine

months ended September 30, 2026 and the 2025 Successor period of August 7 – September 30, 2025,

intercompany revenues were all earned by the Studios segment. The table below presents intercompany revenue by

segment for the 2025 Predecessor periods.

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(a) Other segment expenses for our Studios segment (Successor) and Filmed Entertainment segment (Predecessor) include employee

compensation; costs relating to the distribution of our content; costs for occupancy, technology, and professional services; and

other costs associated with our operations.

(b) Other segment expenses for our Direct-to-Consumer segment in both the Successor and Predecessor periods include employee

compensation; revenue-sharing costs, including for third-party distribution; costs for occupancy, technology, and professional

services; and other costs associated with our operations.

(c) Other segment expenses for our TV Media segment in both the Successor and Predecessor periods include employee compensation;

revenue-sharing costs to television stations affiliated with the CBS Television Network; costs relating to the distribution of our

content; costs for research, occupancy, technology, and professional services; and other costs associated with our operations.

(d) For the Successor periods for thethree and nine months ended September 30, 2026 and August 7 - September 30, 2025, stock-

based compensation expense of$27 million,$36 million and$30 million, respectively, is included in “Restructuring and

transaction-related items.” For the Predecessor periods from July 1 - August 6, 2025 and January 1 - August 6, 2025, stock-based

compensation expense of$10 million and$14 million, respectively, is included in “Restructuring and transaction-related items.”

15)COMMITMENTS AND CONTINGENCIES

Guarantees

Letters of Credit and Surety Bonds

At September 30, 2026, we had outstanding letters of credit and surety bonds of$711 million that were not

recorded on the Consolidated Balance Sheet, including$454 million issued under a$1.9 billion standby letter of

credit facility. In accordance with the contractual requirements of one of our commitments, the letter of credit

outstanding under this facility increases and decreases consistent with the related contractual commitment. Letters

of credit and surety bonds are primarily used as security against non-performance in the normal course of business

under contractual requirements of certain of our commitments. The standby letter of credit facility, which matures

in May 2027, contains customary representations and warranties and covenants substantively similar to the credit

facilities under the Pro Rata Credit Agreement, including the same principal financial covenant(see Note 8), and is

secured on a first lien basis by the same collateral as the Pro Rata Credit Agreement effective at closing of the

WBD Merger.

Other

In the course of our business, we both provide and receive indemnities that are intended to allocate certain risks

associated with business transactions. Similarly, we may remain contingently liable for various obligations of a

business that has been divested in the event that a third party does not live up to its obligations under an

indemnification obligation. We record a liability for our indemnification obligations and other contingent liabilities

when probable and reasonably estimable.

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Legal Matters

General

On an ongoing basis, we vigorously defend ourselves in numerous lawsuits and proceedings and respond to

various investigations and inquiries from federal, state, local and international authorities (collectively,

“Litigation”). Litigation may be brought against us without merit, and is inherently uncertain and always difficult

to predict. However, based on our understanding and evaluation of the relevant facts and circumstances, we believe

that the following matters are not likely, in the aggregate, to result in a material adverse effect on our business,

financial condition and results of operations.

Litigation Relating to the WBD Merger

In April 2026, Pamela Faust, together with four other consumers of streaming, cable television, news media, and

theatrical entertainment programming, filed a private antitrust action in the U.S. District Court for the Northern

District of California against the Company and Skydance Media relating to the WBD Merger. The complaint

sought to block the WBD Merger, among other relief. In May 2026, the plaintiffs filed a motion for a preliminary

injunction to enjoin the WBD Merger pending a trial on the merits. In June 2026, we filed a motion to dismiss and

an opposition to the plaintiffs’ motion for a preliminary injunction. A hearing took place in July 2026 on the

plaintiffs’ motion for a preliminary injunction and our motion to dismiss. The Court denied the plaintiffs’ motion

for a preliminary injunction and in August 2026 granted our motion to dismiss. In August 2026, the plaintiffs filed

an amended complaint, which we moved to dismiss the same month. In September 2026, the plaintiffs filed a

second motion for a temporary restraining order, which we opposed, and the Court denied on September 30, 2026.

The plaintiffs moved for injunctive relief before the U.S. Court of Appeals for the Ninth Circuit and that request

was denied. Faust also filed a petition for a writ of certiorari with the U.S. Supreme Court related to the injunctive

relief, which was also denied. On October 16, 2026, the plaintiffs filed a motion for preliminary injunction seeking

separate operation and preservation of acquired assets. On October 21, 2026, the Court held a hearing on our

motion to dismiss the amended complaint, which the Court granted later that day. On October 28, 2026, we filed an

opposition to the plaintiffs’ motion for preliminary injunction seeking separate operation and preservation of

acquired assets. On November 2, 2026, the Court denied the plaintiffs’ motion for a preliminary injunction.

In July 2026, twelve states (California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New

Jersey, New Mexico, New York, Oregon and Washington) filed an antitrust action in the U.S. District Court for the

Northern District of California against the Company and WBD relating to the WBD Merger. The complaint sought

to block the WBD Merger, among other relief. On July 13, 2026, the plaintiff-states filed a motion for a temporary

restraining order and to show cause why a preliminary injunction should not issue. We filed our opposition on July

16, 2026, and the Court held a hearing on the plaintiff-states’ motion on July 17, 2026. On July 20, 2026, the Court

granted the motion for a temporary restraining order and set a briefing schedule for the preliminary injunction. On

July 22, 2026, we filed a motion seeking a three-day evidentiary hearing for the preliminary injunction during the

week of August 17 or August 24 and to amend the briefing schedule. On July 23, 2026, the plaintiff-states

informed the Court that they would not file their preliminary injunction motion that day, and that the filing timeline

would depend on the outcome of further discussions with the defendants. On July 24, 2026, the plaintiff-states, the

WGA plaintiffs (described below), and defendants entered a stipulation agreeing that the WBD Merger will not

close, and defendants will not take any steps to integrate their operations, until the earlier of (1) five days after a

merits determination in these actions or (2) June 1, 2027. The parties also cancelled the briefing schedule and the

August 3, 2026 hearing on the plaintiff-states’ preliminary injunction motion and agreed to file a joint trial-

scheduling statement by July 31, 2026. The Court granted the stipulation the same day. On July 31, 2026, the

parties, together with the WGA plaintiffs, filed a joint scheduling statement. On August 4, 2026, the Court entered

an order for a single 12-day trial beginning March 2, 2027 and ending March 19, 2027 covering both the plaintiff-

states’ and WGA plaintiffs’ cases. On September 21, 2026, the plaintiff-states, the Company, and WBD filed a

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proposed consent decree with the Court that would resolve the plaintiff-states’ claims. The Court held a hearing

regarding the proposed consent decree and on September 30, 2026, entered the proposed consent decree and

dissolved its July 24, 2026 order that barred the WBD Merger from closing.

In July 2026, the Writers Guild of America, West, Inc., and Writers Guild of America, East, Inc. (collectively, the

“WGA”) filed a private antitrust action in the U.S. District Court for the Northern District of California against the

Company and WBD relating to the WBD Merger. The complaint sought to block the WBD Merger, among other

relief. On July 17, 2026, the case was reassigned to Judge Araceli Martinez-Olguin from Magistrate Judge Peter H.

Kang. On July 21, 2026, the plaintiffs filed a motion for a preliminary injunction and a motion to expedite the

preliminary injunction briefing schedule. On July 22, 2026, we filed an opposition to the motion to expedite. On

July 23, 2026, the plaintiffs filed a reply to the motion to expedite. That same day, the Court issued an order

aligning the briefing schedule on the motions for preliminary injunction in both the state and the WGA actions,

extending the temporary restraining order to August 17, 2026. On July 24, 2026, the plaintiff-states, the WGA

plaintiffs, and the defendants entered a stipulation agreeing that the WBD Merger will not close, and defendants

will not take any steps to integrate their operations as described above. The stipulation also provides that the WGA

plaintiffs will withdraw their preliminary injunction motion and that the parties will file a joint trial-scheduling

statement by July 31, 2026. The Court granted the stipulation the same day. As described above, on August 4,

2026, the Court entered an order for a single 12-day trial beginning March 2, 2027 and ending March 19, 2027

covering both the plaintiff-states’ and WGA plaintiffs’ cases. On September 21, 2026, the WGA, the Company,

and WBD announced that they had entered into a settlement agreement resolving the WGA’s claims and filed a

voluntary dismissal of the WGA’s claims with prejudice. On September 30, 2026, the Court dissolved its July 24,

2026 order that barred the WBD Merger from closing.

In July 2026, Paul Robbins, a Skydance stockholder, filed a derivative lawsuit in the Delaware Court of Chancery

against certain of our officers and directors, alleging that they breached their fiduciary duty of loyalty in pursuit of

the Company’s acquisition of WBD. The plaintiff sought to enjoin the WBD Merger and monetary damages,

among other relief, and asked the Court to expedite the proceedings to allow him to seek an injunction. In August

2026, the plaintiff filed an amended complaint and again asked the Court to expedite the proceedings. The

defendants opposed expedition in August 2026, and the plaintiff replied on September 1, 2026. On September 3,

2026, the Court held oral argument on the plaintiff’s motion to expedite. Following the argument, the Court denied

the plaintiff’s motion to expedite. On September 21, 2026, the plaintiff filed a notice and request to voluntarily

dismiss the action without prejudice. The Court granted the requested dismissal without prejudice the same day.

In addition, we have received demand letters from purported holders of our Class B Common Stock requesting the

inspection of books and records to investigate possible breaches of fiduciary duties or other misconduct in

connection with the WBD Merger.

Litigation Relating to the Skydance Transactions

In connection with the Skydance Transactions, in July 2024, Scott Baker, a purported holder of Paramount Global

Class B Common Stock, filed a putative class action lawsuit in the Court of Chancery of the State of Delaware

against NAI, Shari E. Redstone, Barbara M. Byrne, Linda M. Griego, Judith A. McHale, Charles E. Phillips, Jr.,

Susan Schuman, Skydance Media and David Ellison (the “Baker Action”). The complaint alleges breaches of

fiduciary duties to Paramount Global Class B stockholders in connection with the negotiation and approval of the

Transaction Agreement, among other claims, and seeks unspecified damages, costs and expenses, as well as other

relief. In November 2024, the Court granted the parties’ stipulation in the Baker Action to (i) postpone briefing on

the motions to dismiss until the filing or designation of an operative complaint following resolution of the

plaintiff’s motion to appoint him and the Baerlocher Family Trust, a purported holder of Paramount Global Class B

Common Stock, as co-lead plaintiffs and Berger Montague PC as interim class counsel (the “Baker Leadership

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Motion”), and (ii) stay discovery until resolution of any motion to dismiss an operative complaint following

resolution of the Baker Leadership Motion. In October 2024, various purported stockholders filed motions to

intervene to oppose the Baker Leadership Motion. In December 2024, the plaintiff, along with Mark Baerlocher, as

trustee for the Baerlocher Family Trust, filed an amended complaint alleging the same breaches of fiduciary duties

against the same defendants as in the original complaint. In June 2025, counsel for Mr. Baker informed the Court

that the Baker Leadership Motion would be withdrawn without prejudice and that the group of purported

stockholders seeking lead plaintiff status would meet and confer to propose a schedule for resolving lead plaintiff

applications.

In April 2024, the State of Rhode Island Office of the General Treasurer, on behalf of the Employees’ Retirement

System of Rhode Island, a purported holder of Paramount Global Class B Common Stock, filed a verified

complaint for the inspection of books and records under Section 220 of the General Corporation Law of the State

of Delaware (the “DGCL”) in the Court of Chancery of the State of Delaware against us, seeking the inspection of

books and records to investigate whether Paramount Global’s Board of Directors, NAI, Shari E. Redstone and/or

certain executive officers may have breached their fiduciary duties to stockholders for alleged diversion of

corporate opportunities (the “220 Action”). The magistrate judge held a trial in July 2024 and denied the request

for inspection. The plaintiff filed an exception to the Court, and in January 2025, the Court ruled that the plaintiff

was entitled to obtain books and records that were both necessary and sufficient to fulfill the purpose of its request.

In February 2025, the Court granted an implementing order returning the 220 Action to the magistrate judge for

further proceedings on the scope of production. In March 2025, the Court granted our application for certification

of interlocutory appeal to the Delaware Supreme Court, which was accepted in April 2025. In March 2026, the

Delaware Supreme Court affirmed the trial court’s decision and remanded the case for further proceedings. The

parties submitted supplemental briefs to the Court in June 2026 and submitted reply supplemental briefs in July

2026 concerning the appropriate scope of further inspection. In August 2026, the parties reached an agreement

concerning the review and production of certain documents to resolve all outstanding disputes between the parties

regarding the inspection. In November 2026, the parties entered a stipulation of dismissal.

Certain other purported holders of Paramount Global Class B Common Stock and Class A Common Stock have

delivered demand letters requesting the inspection of books and records to investigate similar alleged breaches of

fiduciary duties in connection with the Skydance Transactions. We have also received demand letters from

purported holders of Paramount Global Class B Common Stock related to alleged omissions in our registration

statement on Form S-4.

Additionally, in August 2024, LiveVideo.AI Corp. filed a lawsuit in the U.S. District Court for the Southern

District of New York against Shari E. Redstone, NAI, Christine Varney and Monica Seligman, alleging that the

defendants did not fairly consider its offer to purchase Paramount Global. The complaint asserts claims for unfair

competition, tortious interference, unjust enrichment and aiding and abetting breach of fiduciary duty, among

others, and seeks unspecified monetary damages, costs and other relief. The defendants were never served. The

parties exchanged several filings related to service and default. In August 2025, the magistrate judge issued a

Report and Recommendation recommending that the case be dismissed and that the Court impose$10,000 in

monetary sanctions against LiveVideo.AI Corp. In September 2025, the district judge adopted the report in full,

dismissed the case, imposed the sanctions, and enjoined LiveVideo.AI Corp. from filing any further lawsuits in any

federal district court arising out of the Skydance Transactions. LiveVideo.AI Corp. filed a notice of appeal in

November 2025, and in April 2026, the appeal was dismissed. In April 2026, LiveVideo.AI Corp. moved to

reinstate the appeal, and in May 2026, the Court denied the motion. LiveVideo.AI Corp. again moved to reinstate

the appeal in June 2026. In June 2026, following briefing, the Court granted defendants’ motion for sanctions

against LiveVideo.AI Corp. and its counsel. LiveVideo.AI Corp. filed a notice of appeal in July 2026.

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LiveVideo.AI Corp. filed its brief in October 2026, and in November 2026, NAI requested a deadline to file its

opening brief in January 2027.

In August 2025, Gabelli Value 25 Fund Inc. (“Gabelli”) filed a putative class action complaint in the Court of

Chancery of the State of Delaware against Barbara M. Byrne, Linda M. Griego, Judith A. McHale, Charles E.

Phillips, Jr., Susan Schuman, Harbor Lights Entertainment, Inc. (f/k/a National Amusements, Inc.) and Shari E.

Redstone (the “NAI Defendants”), and Skydance Media, LLC and RB Tentpole LP (the “Skydance Defendants”),

alleging breach of fiduciary duty against all defendants and unjust enrichment against the NAI Defendants (the

“Gabelli Action”). Gabelli seeks a declaratory judgment, damages, including rescissory damages and/or quasi-

appraisal damages, disgorgement of NAI’s profits, fees and costs, and pre- and post-judgment interest. In

September 2025, the Skydance Defendants filed placeholder motions to dismiss, and Gabelli filed a motion to be

appointed as interim lead plaintiff representing former minority holders of Paramount Global Class A Common

Stock (the “Gabelli Class A Leadership Motion”). In October 2025, counsel for Gabelli filed a letter with the Court

indicating that no competing motions or objections to the Gabelli Class A Leadership Motion were filed and

proposed that the Court appoint Gabelli as lead plaintiff. In November 2025, the Court granted the Gabelli Class A

Leadership Motion and appointed Gabelli as lead plaintiff to prosecute the claims on behalf of the Class A

minority stockholders. Defendants moved to stay discovery pending resolution of any filed and forthcoming

motions to dismiss, and in February 2026, the Court granted defendants’ motion to stay discovery.

In February 2025, New York City Employees’ Retirement System, the New York City Fire Department Pension

Fund, the New York City Police Pension Fund, the New York City Board of Education Retirement System, and the

Teachers’ Retirement System of the City of New York, purported holders of Paramount Global Class B Common

Stock and Class A Common Stock, filed a putative class action lawsuit in the Court of Chancery of the State of

Delaware against Barbara M. Byrne, Linda M. Griego, Judith A. McHale and Susan Schuman, alleging breaches of

fiduciary duties for their alleged failure to sufficiently consider an alternative offer that the plaintiffs claimed was

superior to the Skydance Transactions (the “NYCERS Action”). The plaintiffs argue that the no-shop provision in

the Transaction Agreement should be declared invalid and unenforceable because it prevented the parties from

engaging in further deal discussions and negotiations with companies other than Skydance Media, including,

specifically, Project Rise Partners, after the no-shop period began. The plaintiffs further assert that the Court has

the power to invalidate this provision because Skydance Media allegedly aided and abetted NAI’s and Shari E.

Redstone’s breach of fiduciary duties, including by agreeing to indemnify Shari E. Redstone (through Skydance

Media’s separate agreement with NAI) for any breach of fiduciary duty claims arising out of the Skydance

Transactions up to a certain amount. Skydance Media, NAI, Shari E. Redstone and Paramount Global were not

named as defendants in the original complaint. The NYCERS Action originally sought, among other forms of

relief, an order from the Court enjoining the closing of the Skydance Transactions until the Court reached a final

resolution on the plaintiffs’ claims and an order compelling the special committee of Paramount Global’s Board of

Directors to evaluate Project Rise Partners’ alternative offer to, among other things, acquire Paramount Global

Class A Common Stock for$23.00 per share and Paramount Global Class B Common Stock for$19.00 per share.

Project Rise Partners’ offer was made after the go-shop period in the Transaction Agreement had ended. The

plaintiffs filed a motion for expedited proceedings along with their complaint. In February 2025, the plaintiffs

moved to join Paramount Global, Skydance Media, Shari E. Redstone, NAI and various other entities named in the

Transaction Agreement as necessary parties to the litigation and moved for a temporary restraining order

preventing the closing of the Skydance Transactions until the Court considered the plaintiffs’ anticipated motion

for injunctive relief following expedited discovery. In March 2025, the Court allowed plaintiffs to amend the

complaint to add Paramount Global, Skydance Media, Shari E. Redstone, NAI and the various other entities as

defendants. The amended complaint seeks compensatory damages. The parties reached an agreement to withdraw

the plaintiffs’ request for expedition and their application for injunctive relief in exchange for targeted discovery

from certain of the defendants and third parties.

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In April 2026, the Court held a status conference in the Baker Action, the NYCERS Action and the Gabelli Action,

at which the Court indicated a preference for coordinating the Class A and Class B stockholder actions and for

providing Class A stockholders discovery equivalent to that provided to Class B stockholders. It directed the

parties to submit a proposed scheduling order governing, among other things, the filing of plenary complaints and

the appointment of Class B leadership. In July 2026, following another status conference, the Court entered an

order consolidating the Baker Action and the NYCERS Action (the “Class B Action”).

In April 2025, Metropolitan Water Reclamation District Retirement Fund, Laborers’ and Retirement Board

Employees’ Annuity and Benefit Fund of Chicago, Gary Mendelsohn, and Park Employees’ Annuity and Benefit

Fund of Chicago, purported holders of Paramount Global Class B Common Stock, filed a complaint for the

inspection of books and records under Section 220 of the DGCL in the Court of Chancery of the State of Delaware

against us to maintain standing to enforce their statutory inspection rights and seek an order to produce all the

books and records identified in their Section 220 demands to investigate possible breaches of fiduciary duties in

connection with the Skydance Transactions. The complaint alleges that the documents produced to such purported

stockholders thus far pursuant to their Section 220 demands are insufficient. The complaint seeks an order

requiring us to produce the documents identified in their Section 220 demands, among other relief. In November

2025, the parties contacted the Court with a request to lift the stay and schedule a trial. A magistrate judge held a

trial in March 2026. Subsequently, the parties simultaneously submitted supplemental briefs in April 2026. The

Court issued a decision in June 2026, which held in part that inspection of certain informal board materials would

be necessary and essential to satisfy plaintiffs’ demands.

In the Class B Action, two plenary complaints were filed in October 2026. The first complaint was brought by

Laborers’ and Retirement Board Employees’ Annuity and Benefit Fund of Chicago, Gary Mendelsohn,

Metropolitan Water Reclamation District Retirement Fund, Park Employees’ Annuity and Benefit Fund of

Chicago, State of Rhode Island Office of the General Treasurer, on behalf of the Employees’ Retirement System of

Rhode Island, and Frank Lupacchino. The complaint asserts class action claims for (1) breach of fiduciary duty

against NAI and Shari E. Redstone, (2) breach of fiduciary duty against Shari E. Redstone as director of Paramount

Global, and (3) aiding and abetting breaches of fiduciary duty against Skydance Media, LLC, David Ellison, and

RB Tentpole LP. Plaintiffs seek judgment in their favor, equitable relief, damages, and costs. The second

complaint was brought by New York City Employees’ Retirement System, the New York City Fire Department

Pension Fund, the New York City Police Pension Fund, the New York City Deferred Compensation Plan, and the

Teachers’ Retirement System of the City of New York Variable Annuity Funds. The complaint asserts class action

claims for (1) breach of fiduciary duty against NAI and Shari E. Redstone as controlling stockholders of

Paramount Global, (2) breach of fiduciary duty against Shari E. Redstone as director of Paramount Global, (3)

breach of fiduciary duty against Barbara M. Byrne, Linda M. Griego, Judith A. McHale, Charles E. Phillips, Jr.,

and Susan Schuman, and (4) aiding and abetting breach of fiduciary duty against David Ellison, Lawrence J.

Ellison, Pinnacle Media Ventures LLC, Pinnacle Media Ventures II LLC, Pinnacle Media Ventures III LLC, and

RB Tentpole LP. Plaintiffs seek judgment in their favor, damages, and costs. Briefing on leadership applications in

the Class B Action will follow in November 2026.

Litigation Relating to Video Streaming Patents

In August 2025, Nokia Technologies Oy filed complaints alleging infringement of patents related to video

streaming against the Company in the United States, Brazil, Germany and the Unified Patent Court (“UPC”) in

Europe. In November 2025, the Company filed a rate-setting action against Nokia in the High Court of Justice of

England and Wales (“U.K. Court”). In March 2026, Nokia submitted to the jurisdiction of the U.K. Court and

agreed to a mechanism in which the U.K. Court would determine reasonable and non-discriminatory terms for a

global license to Nokia’s video patent portfolio, the Company would make a refundable interim payment to Nokia

as determined by the U.K. Court, and all parallel litigation involving Nokia’s video patent portfolio would be

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withdrawn or dismissed by the parties. The interim payment amount is entirely without prejudice to the amount

payable for the license to be determined at trial and is refundable in that if it exceeds the U.K. Court’s final rate

determination, then Nokia will refund the difference to the Company with interest. Nokia’s complaints filed in the

United States, Brazil, Germany and the UPC were dismissed without prejudice, and the U.K. Court set the interim

payment amount in June 2026. The trial is scheduled for late 2026.

Over the past several years, Nokia Corporation and Nokia Technologies Oy have alleged that WBD is infringing

on their portfolio of patents related to the delivery of streaming video. In November 2025, Nokia brought suit

against WBD in certain jurisdictions, and WBD and Dplay Entertainment Limited brought suit in other

jurisdictions, and filed a rate-setting proceeding in the U.K. Court against Nokia seeking a determination of a

reasonable and non-discriminatory royalty rate for a global license to certain Nokia patents, including standard-

essential patents related to the H.264/AVC and H.265/HEVC standards and other non-essential multimedia patents.

In June 2026, the U.K. Court determined that WBD is required to make an interim license payment to Nokia

during the pendency of the litigation, which includes refundable and non-refundable components, and trial is

currently scheduled for late 2026.

Claims Related to Former Businesses

Asbestos

We are a defendant in lawsuits claiming various personal injuries related to asbestos and other materials, which

allegedly occurred as a result of exposure caused by various products manufactured by Westinghouse, a

predecessor, generally prior to the early 1970s. Westinghouse was neither a producer nor a manufacturer of

asbestos. We are typically named as one of a large number of defendants in both state and federal cases. In the

majority of asbestos lawsuits, the plaintiffs have not identified which of our products is the basis of a claim. Claims

against us in which a product has been identified most commonly relate to allegations of exposure to asbestos-

containing insulating material used in conjunction with turbines and electrical equipment.

Claims are frequently filed and/or settled in groups, which may make the amount and timing of settlements, and

the number of pending claims, subject to significant fluctuation from period to period. We do not report as pending

those claims on inactive, stayed, deferred or similar dockets that some jurisdictions have established for claimants

who allege minimal or no impairment. As of September 30, 2026, we had pending approximately 16,770 asbestos

claims, as compared with approximately 17,490 as of December 31, 2025. During thethird quarter of 2026, we

received approximately 840 new claims and closed or moved to an inactive docket approximately 2,370 claims.

We report claims as closed when we become aware that a dismissal order has been entered by a court or when we

have reached agreement with the claimants on the material terms of a settlement. Settlement costs depend on the

seriousness of the injuries that form the basis of the claims, the quality of evidence supporting the claims and other

factors. Our total costs for settlement and defense of asbestos claims after insurance recoveries and net of tax were

approximately$23 million for the Successor period from August 7 - December 31, 2025,$11 million and$34

million for the Predecessor periods from January 1 - August 6, 2025, and the year ended December 31, 2024,

respectively. Our costs for settlement and defense of asbestos claims may vary year to year and insurance proceeds

are not always recovered in the same period as the insured portion of the expenses.

Filings include claims for individuals suffering from mesothelioma, a rare cancer, the risk of which is allegedly

increased by exposure to asbestos; lung cancer, a cancer which may be caused by various factors, one of which is

alleged to be asbestos exposure; other cancers, and conditions that are substantially less serious, including claims

brought on behalf of individuals who are asymptomatic as to an allegedly asbestos-related disease. A significant

number of pending claims against us are non-cancer claims. It is difficult to predict long-term future asbestos

liabilities, as events and circumstances may impact the estimate.

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Environmental and Other

From time to time, we also receive claims from federal and state environmental regulatory agencies and other

entities asserting that we are or may be liable for environmental cleanup costs and related damages principally

relating to our historical and predecessor operations. In addition, from time to time we receive personal injury

claims including toxic tort and product liability claims (other than asbestos) arising from our historical operations

and predecessors.

Contingent Liabilities Relating to Former Businesses

In connection with recording Paramount Global’s net assets at the Ultimate Parent’s basis, “Other liabilities” was

increased to reflect the fair value of Paramount Global’s estimated contingent liabilities for the defense and

settlement of asbestos lawsuits as well as claims from federal and state environmental regulatory agencies and

other entities asserting liability for environmental cleanup costs and related damages (see Note 3). The estimated

fair value of the asbestos-related liability was determined in consultation with a third-party firm with expertise in

estimating asbestos liability and represents the estimate of the amount a third party would pay to take on the risk of

any asbestos-related future losses.

We record an accrual for a loss contingency when it is both probable that a liability has been incurred and when the

amount of the loss can be reasonably estimated. The reasonably estimable period for our long-term asbestos

liability is 10 years, which we determine in consultation with a third-party firm with expertise in estimating

asbestos liability and is due to the inherent uncertainties in the tort litigation system. This estimate is based upon

many factors, including the number of outstanding claims, estimated average cost per claim, the breakdown of

claims by disease type, historic claim filings, costs per claim of resolution and the filing of new claims, and is

assessed in consultation with the third-party firm. While we believe that our accruals for these matters are

adequate, there can be no assurance that circumstances will not change in future periods and, as a result, our actual

liabilities may be higher or lower than our accrual.

16)SUPPLEMENTAL FINANCIAL INFORMATION

Supplemental Cash Flow Information

The cash balance on August 6, 2025 (Predecessor) was$2.46 billion. The cash balance on August 7, 2025

(Successor) was$3.85 billion. The difference reflects the proceeds received from the Skydance Transactions PIPE

(see Note 3) and cash received from Skydance Media’s opening balance sheet, offset by cash paid for transaction-

related costs incurred prior to the closing of the Skydance Transactions.

In connection with the closing of the Skydance Transactions, on August 7, 2025 (Successor), borrowings

outstanding of$720 million under Skydance Media’s revolving credit facility were repaid in full.

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Lease Income

We enter into operating leases for the use of our owned production facilities and office buildings. Lease payments

received under these agreements consist of fixed payments for the rental of space and certain building operating

costs, as well as variable payments based on usage of production facilities and services, and escalating costs of

building operations. We recorded total lease income, including both fixed and variable amounts, of$7 million and

$23 million for thethree and nine months ended September 30, 2026 (Successor), respectively, and$7 million,$2

million, and$23 million for the periods from August 7 - September 30, 2025 (Successor), July 1 - August 6, 2025

(Predecessor), and January 1 - August 6, 2025 (Predecessor), respectively.

FCC Licenses Impairment Charges (Predecessor)

Prior to the third quarter of 2025, FCC licenses were classified as indefinite-lived intangible assets, which were

tested for impairment on an annual basis and between annual tests if events occurred or circumstances changed that

would more likely than not reduce the fair value below carrying value. For the second quarter of 2025, as a result

of declines in industry projections, we determined that interim impairment tests were necessary for six markets in

which we hold FCC licenses.

The impairment tests indicated that the estimated fair values of FCC licenses in each of thesix markets tested were

below their respective carrying values. Accordingly, we recorded an impairment charge during the second quarter

of 2025 of$157 million to write down the carrying values of these FCC licenses to their then aggregate estimated

fair value.

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