Skydance Corp

In addition to the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2025

(filed with the Securities and Exchange Commission on February 25, 2026), the following risks relating to the

WBD Merger and our issuance on October 13, 2026 of warrants to purchase shares of our Class B Common Stock

(the “Warrants”) could adversely affect our business, financial condition or results of operations. Capitalized terms

used in the section entitled “Risks Relating to the Warrants” but not defined in that section have the meanings

given in our prospectus supplement relating to the Warrants, filed with the Securities and Exchange Commission

on October 5, 2026 (the “Prospectus”).

Risks Relating to the WBD Merger

The commitments we made under the States Consent Decree restrict how we operate our business, raise our

costs and may require us to divest certain assets. Any failure to comply could subject us to monetary payments,

required divestitures and other adverse consequences.

In September 2026, the Company and WBD entered into a Consent Decree (the “States Consent Decree”) with

twelve states (collectively, the “Plaintiff States”). The States Consent Decree requires the combined company and

its subsidiaries to meet a broad set of commitments over a five-year commitment period. Among other things, the

combined company must:

•release at least 30 to 32 films in the United States annually, subject to minimums for wide-release,

independent, self-produced and higher-budget films, with theatrical windows of at least 45 days and no

subscription streaming availability for at least 90 days;

•comply with negotiation obligations regarding affiliation terms for the Company’s and WBD’s basic cable

portfolios; spend at least $300 million more annually on U.S. production than combined 2025 levels, retain and

operate both studio lots, and honor existing collective bargaining agreements;

•fund $9.5 million annually in workforce and arts programs and $5 million annually for an Independent Film

Fund;

•establish a News Editorial Independence Board for CBS News and CNN and maintain Pluto TV as a free, ad-

supported service; and

•comply with monitoring and reporting obligations and reimburse up to $40 million of the Plaintiff States’ fees

and costs.

These commitments restrict how and when we release films and will increase our costs. They may also limit our

ability to realize the synergies we expect from the WBD Merger.

Additionally, if we fail to comply, we could face adverse consequences, including the divestiture of Miramax

Studios, a $30 million payment for each film shortfall and the divestiture of certain cable networks. Any divestiture

could occur on unfavorable terms, and non-compliance could also lead to enforcement actions and reputational

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operations.

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

The WBD Merger could cause disruptions to our business or commercial relationships, including those of the

WBD business, which could have an adverse impact on our business, financial condition or results of operations.

Parties with which we have business relationships may experience uncertainty regarding the integration of our

businesses and the future of such relationships and may delay or defer certain business decisions, seek alternative

relationships with third parties or seek to alter their present business relationships with us. Parties with whom we or

WBD otherwise may have sought to establish business relationships may seek alternative relationships with third

parties. We have experienced, and may continue to experience, negative publicity relating to the WBD Merger,

which could have an adverse effect on our ongoing operations, including, but not limited to, retaining and

attracting employees and creative talent, maintaining our relationships with existing customers and obtaining

potential new customers. We compete with other content creators for creative talent, including producers, directors,

actors and writers, and if we fail to retain or attract new key employees or creative talent, our business, financial

condition or results of operations could be adversely affected.

The integration of WBD may place a significant burden on our management and internal resources. The diversion

of management’s attention away from day-to-day business concerns and any difficulties encountered in the

transition and integration process could adversely affect our business, financial condition or results of operations.

Litigation relating to the WBD Merger could result in the payment of damages.

In connection with the WBD Merger, we and WBD are subject to litigation and related proceedings, including

proceedings seeking monetary damages, and we may become subject to additional litigation, demand letters,

claims, enforcement actions or other proceedings relating to the WBD Merger. See Note 15 to the consolidated

financial statements appearing in Item 1 of Part I of this Quarterly Report on Form 10-Q under the caption “Legal

Matters—Litigation Relating to the WBD Merger,” and Part II, Item 1, “Legal Proceedings,” for additional

information regarding certain pending WBD Merger litigation and related proceedings.

The outcome of litigation and other proceedings is uncertain, and these matters, and any additional litigation,

demand letters, claims, enforcement actions or other proceedings relating to the WBD Merger, could result in

substantial costs, result in the payment of damages, or otherwise adversely affect our business, financial condition

or results of operations.

In addition, governmental authorities could initiate additional actions challenging the WBD Merger, which could

result in burdensome conditions, terms, obligations or restrictions, or otherwise adversely affect the post-close

entity.

Although we expect the WBD Merger will result in synergies and other benefits, those synergies and benefits

may not be realized or may not be realized within the expected time frame. WBD’s business may not be

integrated successfully, or such integration may be more difficult, time-consuming or costly than expected.

Operating costs, customer loss and business disruption, including difficulties in maintaining relationships with

employees, customers, suppliers or vendors, may be greater than expected following the WBD Merger. Revenues

following the WBD Merger may be lower than expected.

Our ability to realize the anticipated benefits of the WBD Merger will depend, to a large extent, on our ability to

integrate WBD’s business in a manner that facilitates growth opportunities or achieves the potential synergies, cost

savings or revenue growth opportunities we have identified without adversely affecting current revenues or

investments in future growth. Even if we are able to successfully integrate WBD, the anticipated benefits of the

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WBD Merger, including the expected synergies, may not be realized fully or at all or may take longer to realize

than expected.

The acquisition of another public company and integration of its business with our business are complex, costly

and time-consuming and may divert significant management attention or resources towards integration at the

expense of our ordinary course business practices and operations. Post-closing, our management may face

significant challenges in integrating the technologies, organizations, systems, procedures, policies and operations,

as well as addressing the different business cultures at Skydance and WBD, managing the increased scale and

scope of the combined businesses, identifying and eliminating duplicative programs, and retaining key personnel.

The post-closing integration process could take longer than anticipated and could result in the loss of key

employees, the disruption of each company’s ongoing businesses, tax costs or inefficiencies, or inconsistencies in

standards, controls, information technology systems, procedures and policies, any of which could adversely affect

our ability to maintain relationships with customers, employees or other third parties. The overall combination of

Skydance’s and WBD’s businesses may also result in material unanticipated expenses, liabilities, competitive

disadvantages, and loss of customer, creative talent and other business relationships. Failure to efficiently and

effectively integrate the two businesses and to realize the anticipated benefits of the WBD Merger could adversely

affect our business, financial condition or results of operations.

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

•the diversion of management attention to integration matters;

•difficulties in integrating operations and systems, including administrative, human resources and information

technology infrastructure, financial reporting and internal control systems and intellectual property and

communications systems;

•challenges in conforming standards, controls, procedures and accounting and other policies, business cultures

and compensation structures between the two companies;

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

•challenges in retaining existing, and obtaining new customers, viewers, subscribers, suppliers, distributors,

licensors, lessors, employees, business associates, advertisers, creative talent and others;

•difficulties in achieving anticipated cost savings, synergies, accretion targets, business opportunities, financing

plans and growth prospects from the combination;

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

company;

•the costs of servicing the increased indebtedness and interest expense of the combined company resulting from

the WBD Merger and the related financing transactions;

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

•contingent liabilities that are larger than expected; and

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

WBD Merger.

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Many of these factors are outside of our control, and any one of them could result in lower revenues, higher costs

and diversion of management time and energy, which could materially and adversely impact our business, financial

condition or results of operations. In addition, even if the operations of WBD’s business are integrated successfully

with Skydance, the full benefits of the WBD Merger may not be realized, including, among others, the synergies,

cost savings or sales or growth opportunities that are expected. These benefits may not be achieved within the

anticipated time frame or at all. Further, additional unanticipated costs may be incurred in the integration of

WBD’s business and the financing of the transactions. All of these factors could cause dilution to the earnings per

share of Skydance, decrease or delay the projected accretive effect of the WBD Merger, and negatively impact the

price of our Class B Common Stock following the WBD Merger. As a result, no assurances can be provided that

the acquisition of WBD will result in the realization of the full benefits expected from the WBD Merger within the

anticipated time frames or at all.

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

Merger.

We have incurred, and will continue to incur, substantial expenses in connection with and as a result of completing

the WBD Merger, including financial advisory, legal, accounting, consulting and other advisory fees and expenses,

employee-benefit and related expenses, regulatory filings, financing fees and filing and printing fees. In addition,

over a period of time following the closing of the WBD Merger (the “Closing”), we expect to incur substantial

expenses in connection with integrating and coordinating WBD’s business, operations, policies and procedures.

While we have estimated the transaction and integration expenses we expect to incur, factors beyond our control

could affect the total amount or the timing of these expenses. Many of the expenses that will be incurred are, by

their nature, difficult to estimate accurately. These expenses may exceed the costs historically borne by us. These

costs could adversely affect our business, financial condition or results of operations.

We incurred substantial indebtedness in connection with the WBD Merger, and our leverage may materially

and adversely affect our business, financial condition and results of operations.

We incurred substantial indebtedness in connection with the WBD Merger. We incurred (or assumed) additional

debt with an aggregate principal amount of$72.1 billion in connection with the WBD Merger. 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, and$12.4 billion of Second Lien Senior Secured Notes, (ii)

$12.6 billion of Second Lien Exchange Notes issued in our exchange offers for certain outstanding senior notes of

subsidiaries of WBD (the “WBD Issuers”), and (iii)$2.7 billion of other outstanding unsecured notes and

debentures of the WBD Issuers that we assumed. The foregoing indebtedness was incurred (or assumed) following

September 30, 2026, and therefore constitutes a subsequent event, as described further in Note 2 and Note 8 to the

consolidated financial statements. As a result, such indebtedness is in addition to our debt with an aggregate

principal amount of$16.29 billion as of September 30, 2026 (of which $1.75 billion was repaid subsequent to

September 30, 2026, including in connection with the WBD Merger).

Our ability to make payments on and to refinance our indebtedness, including the debt incurred pursuant to the

WBD Merger, as well as any future debt that we may incur, will depend on our ability to generate cash in the

future from operations or financings. Our ability to generate cash is subject to general economic, financial,

competitive, legislative, regulatory and other factors that are beyond our control. We may not generate sufficient

cash flow from our operations, or future borrowings may not be available to us in an amount sufficient, to service

our debt and meet our business needs, such as funding working capital or the expansion of our operations.

If our cash flows and capital resources are insufficient to fund debt service obligations or we are not able to repay

or refinance our debt as it becomes due, we may be forced to take certain actions, including reducing spending on

content and programming, reducing future financing for working capital, capital expenditures and general

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corporate purposes, reducing or delaying investments, reducing, suspending or eliminating our dividend, disposing

of material assets or operations, seeking additional debt or equity capital, restructuring or refinancing our

indebtedness or dedicating an unsustainable level of our cash flow from operations to the payment of principal and

interest on our indebtedness. The lenders or bondholders that hold our debt could also accelerate amounts due in

the event that we default, which could potentially trigger a default or acceleration of the maturity of our other debt.

The level and quality of the combined company’s earnings, operations, business and management, among other

things, will impact the determination of the combined company’s credit ratings. A decrease in the ratings assigned

to the combined company or any series of its debt by the ratings agencies may negatively impact the combined

company’s access to the debt capital markets and increase the combined company’s cost of borrowing. There can

be no assurance that the combined company will be able to obtain financing on acceptable terms or at all, or be

able to generate sufficient cash flow to reduce leverage in the time frame expected or at all. In addition, there can

be no assurance that the combined company will be able to maintain the creditworthiness or prospective credit

ratings of Skydance or WBD, particularly given recent negative ratings actions or credit watches taken in light of

the WBD Merger, and any further actual or anticipated changes or downgrades in such credit ratings may have a

negative impact on the liquidity, capital position or access to capital markets of the combined company.

In addition, our leverage could put us at a competitive disadvantage compared to our competitors that are less

leveraged. These competitors could have greater financial flexibility to pursue strategic acquisitions and secure

additional financing for their operations. Our leverage could also impede our ability to withstand downturns in our

industry or the economy in general.

Despite our current level of indebtedness, we may still incur substantially more indebtedness. This could

exacerbate the risks associated with our substantial indebtedness.

We may incur substantial additional indebtedness in the future. The terms of the agreements governing the

indebtedness we have incurred in connection with the WBD Merger may limit, but not prohibit, us from incurring

additional indebtedness. If new indebtedness is added to our current debt levels, the related risks that we now face

could increase. Any additional indebtedness could have the effect of, among other things, reducing our flexibility

to respond to changing business and economic conditions. In addition, the amount of cash required to pay interest

on any additional indebtedness levels will increase the demand on our cash resources and reduce funds available

for capital expenditures, share repurchases and dividends, and other activities and may create competitive

disadvantages for us relative to other companies with lower debt levels.

Our preexisting stockholders have a reduced ownership and economic interest in Skydance after the WBD

Merger. The PIPE Transaction and the issuance of the Warrants may cause dilution to the earnings per share

of Skydance, which may negatively affect the market price of our Class B Common Stock.

Following the Closing, the Equity Syndication Parties (excluding affiliates of the Ellison Parties and RedBird)

received approximately 45% of the outstanding shares of our Class B Common Stock as a result of the PIPE

Transaction (as defined in the WBD Merger Agreement). The shares of Class B Common Stock issued in the PIPE

Transaction represent, in the aggregate, 78% of the shares of our Class B Common Stock outstanding after giving

effect to the PIPE Transaction.

Consequently, our preexisting stockholders have a reduced ownership and economic interest following the

consummation of the WBD Merger and the PIPE Transaction. Additionally, the Subscription Agreement with the

Ellison Parties resulted in the issuance of additional shares of Class B Common Stock in the amount required to

finance the Ticking Consideration (as defined in the WBD Merger Agreement).

The shares of Class B Common Stock issued in the PIPE Transaction are deemed to be “restricted securities”

within the meaning of Rule 144 of the U.S. Securities Act of 1933, as amended (the “Securities Act”), subject to a

holding period pursuant to Rule 144. The participants in the PIPE Transaction entered into a registration rights

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agreement that entitles them to certain demand, piggyback and resale registration rights. Certain participants have

also entered into lock-ups that prohibit transfers of shares acquired in the PIPE Transaction for a period of 180

days without the prior consent of the Company, subject to certain carveouts. Such shares may be sold in the public

market only if registered or if they qualify for an exemption from registration, including the exemptions pursuant

to Rule 144. Consequently, the public float for our Class B Common Stock is smaller than it would be if the

ownership of our Class B Common Stock were less concentrated. If we do not increase our public float following

the Closing, our Class B Common Stock may be less liquid than the shares of companies with broader public

ownership, which could increase the volatility and adversely affect the trading price of our Class B Common

Stock. While the exercise of Warrants would increase the total number of shares of Class B Common Stock

outstanding, the exercise of Warrants may not meaningfully increase the public float of our Class B Common

Stock.

The issuance of shares of our Class B Common Stock as part of the PIPE Transaction and the shares of Class B

Common Stock issuable upon the exercise of the Warrants could have the effect of depressing the market price of

our Class B Common Stock. Furthermore, if we raise additional equity capital following the Closing, including in

order to achieve our deleveraging goals with respect to the substantial indebtedness we have incurred in connection

with the WBD Merger, any such equity financings would result in additional dilution to holders of our common

stock. In addition, we could encounter other transaction-related costs or effects, such as the failure to realize all of

the benefits anticipated in the WBD Merger, which could cause dilution to earnings per share or decrease or delay

the expected accretive effect of the WBD Merger and cause a decrease in the market price of our Class B Common

Stock.

Risks Relating to the Warrants

An active public market for the Warrants may not be sustained, which would adversely affect the liquidity and

market price of the Warrants.

The Warrants are subject to trading dynamics over which we have no control. An active and orderly trading market

for the Warrants may not be sustained. The trading market for the Warrants may lack adequate size, liquidity or

price transparency or may have an unusually high bid-ask spread. Warrantholders may be unable to sell their

Warrants at a price that is favorable to such Warrantholders. The Warrants were distributed all at once, which

could lead to demand and supply imbalances and negatively impact the trading price of the Warrants, particularly

if there is little or no market demand for the Warrants.

The trading price for the Warrants may bear little or no relationship to traditional valuation methods, or to the

market price of our Class B Common Stock, and therefore the trading price of the Warrants may fluctuate

significantly.

The trading price of the Warrants may have little or no relationship to, and may be significantly lower, or at times

higher, than the price that would otherwise be established using traditional indicators of value, such as our future

prospects and those of our industry in general; future potential revenues, earnings, cash flows, and other financial

and operating information, or multiples thereof; market prices of securities and other financial and operating

information of companies engaged in activities similar to ours; and the views of research analysts. Warrantholders

who do not intend to hold the Warrants may sell them, which may create downward pressure on the trading price

of the Warrants.

Hedging arrangements relating to the Warrants may affect the value and volatility of our Class B Common

Stock or other securities.

In order to hedge their financial positions, Warrantholders may enter into hedging transactions with respect to our

Class B Common Stock or other securities of ours, may unwind or adjust hedging transactions and may purchase

or sell large blocks of our Class B Common Stock or other securities in one or more market transactions, including

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in secondary market transactions. The effect, if any, of these activities on the trading price of our Class B Common

Stock or such other securities will depend in part on market conditions and cannot be known in advance, but any of

these activities could adversely affect the value and price volatility of our Class B Common Stock or such other

securities.

Warrantholders may lose some or all of their financial investment after exercising a Warrant.

Warrantholders may incur a financial or other loss upon or subsequent to the exercise of a Warrant due to a drop in

our stock price, or by a failure to timely deliver shares as of any particular date after exercise, or for other reasons.

In order for Warrantholders to recover the value of their investment in the shares of Class B Common Stock

received upon exercise of a Warrant at the Exercise Price for Physical Settlement, the aggregate value of Class B

Common Stock so received per Warrant must be more than the Exercise Price of such Warrant, which is initially

$12.00 per share. There can be no assurance that the market price of our Class B Common Stock will exceed the

Exercise Price for Physical Settlement at any time prior to the expiration of the Warrants. To the extent the market

value of our Class B Common Stock does not exceed the Exercise Price for Physical Settlement, investors may be

unable to resell shares at or above the price at which they acquired them through the exercise of Warrants for

Physical Settlement. The price of our Class B Common Stock may fluctuate significantly and trade below the

Exercise Price for Physical Settlement, in which case investors could incur substantial losses.

Speculation in our publicly traded Class B Common Stock or the Warrants may result in extreme price

volatility.

Stockholders or Warrantholders or outside investors may speculate on the direction of movements in the price of

our Class B Common Stock or Warrants. Speculation in the price of our Class B Common Stock or Warrants may

involve long and short exposures. Sudden changes in demand or supply for our Class B Common Stock or

Warrants due to speculation or other reasons may create trading anomalies that add volatility to the trading price of

these securities. The volatility or direction of our stock price or Warrant price may be unrelated or disproportionate

to our operating results, which could cause significant losses to such investments.

We may designate an Early Expiration Date for the Warrants if certain stock price conditions are satisfied

following the date that is the third anniversary of the issuance of the Warrants, which could shorten the period

during which Warrantholders may exercise Warrants.

Following the date that is the third anniversary of the issuance of the Warrants, or October 13, 2029, if the Early

Expiration Price Condition is satisfied, we may, in our sole discretion, designate an Early Expiration Date for the

Warrants that is earlier than the Scheduled Expiration Date. As a result, Warrantholders may have less time to

decide whether to exercise Warrants than if the Warrants remained outstanding until the Scheduled Expiration

Date. This could require Warrantholders to make investment decisions regarding the exercise of their Warrants

earlier than they may otherwise have chosen, which could adversely affect the value of the Warrants.

The issuance of Class B Common Stock upon the exercise of the Warrants may depress the stock price for

shares of our Class B Common Stock.

On October 13, 2026, we issued approximately 470.7 million Warrants, each of which is exercisable initially for

one share of Class B Common Stock. Subject to the adjustment provisions of the Warrant Agreement, if all

outstanding Warrants are exercised through Physical Settlement, we would issue approximately 470.7 million

shares of Class B Common Stock, representing an approximately 9% increase from our number of shares of Class

B Common Stock outstanding as of November 4, 2026. The issuance of such additional shares of Class B Common

Stock upon exercise of the Warrants, and the resale of such shares on the open market after their issuance, or the

perception that such sales could occur, could result in significant downward pressure on the stock price for shares

of our Class B Common Stock. In addition, the price of our Class B Common Stock could be adversely affected by

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possible sales, including short sales, of our Class B Common Stock by investors in the Warrants and other

securities who engage in hedging and arbitrage activities.

Warrantholders will not be entitled to any of the rights of holders of our Class B Common Stock and the

Warrants will not participate in any dividends prior to the exercise thereof.

In general, Warrantholders will not be entitled to any rights with respect to our Class B Common Stock, including,

without limitation, voting rights and rights to receive any dividends or other distributions on our Class B Common

Stock, but Warrantholders will be subject to all changes affecting our Class B Common Stock.

Since August 7, 2025, we have declared five quarterly cash dividends of $0.05 per share on our Class A and Class

B Common Stock. The Warrants will not participate in any dividends declared on our shares of Class B Common

Stock. Additionally, although the Warrants will be adjusted for certain distributions on our Class B Common Stock

as described in the Prospectus, the Warrants will not be adjusted for any regular quarterly cash dividends that are in

the aggregate less than or equal to $0.05 per share of Class B Common Stock. Any determination to declare or pay

dividends, including whether to continue paying our current quarterly dividend or to increase, reduce, suspend or

discontinue it, would be made by our Board of Directors and would depend upon our results of operations,

financial condition, contractual restrictions, restrictions imposed by applicable law and other factors that the Board

of Directors deems relevant.

The Warrants do not automatically exercise, and any Warrant not exercised prior to the Expiration Date will

lose all financial value.

The Warrants do not automatically exercise, even if the value of our Class B Common Stock receivable upon

exercise of a Warrant exceeds the Exercise Price. Warrantholders are entitled to exercise the full number of

Warrants they hold or any portion thereof. Any Warrants that are not exercised (including due to failure to pay the

Exercise Price when due) during the Exercise Period will expire unexercised, meaning the Warrants will no longer

exist, and Warrantholders will also not receive any shares of our Class B Common Stock or other value in

connection with such Warrants.

Warrantholders may be subject to tax upon an adjustment to the Exercise Price or the Number of Shares even

though they do not receive a corresponding cash distribution.

The Exercise Price and the Number of Shares are subject to adjustment in certain circumstances. To the extent any

such adjustment or failure to adjust results in an increase in Warrantholders’ proportionate interest in our assets or

our earnings and profits, Warrantholders may be deemed to have received for U.S. federal income tax purposes a

taxable dividend to the extent deemed paid out of our earnings and profits without the receipt of any cash. If

Warrantholders are Non-U.S. Holders, such deemed dividend generally will be subject to U.S. federal withholding

tax, which may be set off against shares of our Class B Common Stock to be delivered upon exercise of Warrants.