Paramount Skydance Corp (PSKY)

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

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

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

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

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

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

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

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

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

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

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

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

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

Subsidies Regulation following a Phase 1 review.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ellison Parties.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Ticking Consideration or certain other additional amounts as defined in the WBD Merger Agreement are required)

from the Trust and $250 million from RedBird pursuant to the terms of the Subscription Agreements.

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, the “Equity Syndication” and the

assignees, the “Equity Syndication Parties”) to the Equity Syndication Parties. The Equity Syndication Parties are

composed of 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. The aggregate allocations under the Equity Syndication total to the full

amount of the commitments under the Subscription Agreements. At closing of the WBD Merger, Paramount will

issue to each Equity Syndication Party a number of newly issued nonvoting shares of Paramount Skydance

Corporation Class B Common Stock (or securities convertible into shares) equal to its allocated amount divided by

the Syndication Purchase Price, defined as the 20-trading-day daily volume-weighted average price of Paramount

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. The Equity Syndication does

not relieve the Equity Investors of their contractual commitments made to the Company. To the extent that any

Equity Syndication Party does not perform under its syndication assignment, the obligation of the Equity Investors

to fund the related amount of the commitments would continue to be required under the Subscription Agreements.

Following the closing, the Ellison Family (as defined below) and RedBird will remain the sole holders of

Paramount Class A Common Stock, representing 100% of the voting shares of Paramount. For the purpose of

determining the controlling ownership of Paramount, 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.

We have also secured commitments for debt financing totaling $54 billion, which include a $49 billion 364-day

senior secured bridge loan facility, which we plan, subject to market conditions and other timing considerations, to

reduce or replace with permanent financing (which may include issuance of debt securities) on or prior to the

closing of the WBD Merger and, in connection with a credit agreement entered into in April 2026 (the “Pro Rata

Credit Agreement”), $2.50 billion three-year senior secured term A loans and $2.50 billion five-year senior secured

term A loans. The term A loans will be made in a single borrowing on the closing date of the WBD Merger. The

Pro Rata Credit Agreement also provides for a $5.00 billion five-year senior secured revolving credit facility,

which will be used for general corporate purposes, and will replace our existing revolving credit facility (see

Capital Structure). The availability and initial funding of the facilities under the Pro Rata Credit Agreement and the

bridge loan facility (if not replaced by permanent financing) are subject to the satisfaction or waiver of customary

conditions set forth in the Pro Rata Credit Agreement and the bridge commitment papers, including the closing of

the WBD Merger.

In addition, following the closing of the WBD Merger, each holder of Paramount Skydance Corporation Class B

Common Stock (excluding any Equity Investor or affiliate thereof) as of a record date to be determined will

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

exercisable at an initial exercise price per share equal to the Syndication Purchase Price and subject to customary

anti-dilution and fundamental change make-whole adjustments. Beginning on the third anniversary of issuance, we

may call 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 day period. We intend to apply to list the Warrants for trading on

the Nasdaq Stock Market LLC (“Nasdaq”) separate from our Class B Common Stock, subject to applicable

approvals. The planned Warrant issuance is in lieu of a previously planned rights offering at $16.02 per share. In

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Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

connection with the Warrant issuance, existing Paramount restricted stock units are expected to be equitably

adjusted pursuant to pre-existing anti-dilution provisions in Paramount equity plans.

WBD Debt—In May 2026, we commenced (i) exchange offers, which are expected to result in the exchange of up

to $12.7 billion aggregate principal amount of certain of WBD’s senior notes for newly issued Paramount notes,

and (ii) tender offers for cash for up to $2.4 billion aggregate principal amount of other WBD senior notes, in each

case conditioned on the closing of the WBD Merger. In June 2026, WBD entered into a seven-year $13.0 billion

term loan (“First Lien Credit Agreement”), and a seven-year €1.7 billion term loan (the “WBD Term Loans”). The

proceeds were used to repay the $15.0 billion bridge facility WBD had outstanding on March 31, 2026. We plan to

replace or refinance the WBD Term Loans, if not refinanced by WBD prior to closing of the WBD Merger.

The NAI Transaction—On August 7, 2025, pursuant to a purchase and sale agreement dated July 7, 2024, certain

affiliates of investors in Skydance Media, LLC (“Skydance”), comprised of entities controlled by the Ellison

Family 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”).

The Skydance Transactions—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 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., was formed on June 3, 2024 to consummate the 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 as part of the Skydance Transactions.

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

Skydance made an investment of $6.0 billion into Paramount Skydance Co

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Management’s discussion and analysis of the results of operations and financial condition of Paramount Skydance Corporation should be read in conjunction with our consolidated financial statements and related notes. References to “Paramount,” the “Company,” “we,” “us” and “our” refer to Paramount Skydance Corporation and its consolidated subsidiaries, unless the context otherwise requires.

The NAI Transaction—On August 7, 2025 (the “Closing Date”), pursuant to a purchase and sale agreement dated July 7, 2024, certain affiliates of investors in Skydance Media, LLC (“Skydance”), 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”).

The Transactions—Also on the Closing Date, following the completion of the NAI Transaction and pursuant to the Transaction Agreement dated as of July 7, 2024, Paramount Global and Skydance became wholly-owned subsidiaries of Paramount Skydance Corporation (the transactions contemplated by the Transaction Agreement, the “Transactions”). Paramount Skydance Corporation, formerly known as New Pluto Global, Inc., was formed on June 3, 2024, to consummate the 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 as part of the Transactions.

Concurrent with the NAI Transaction, the NAI Equity Investors and certain other affiliates of investors in Skydance made an investment of $6.0 billion into Paramount Skydance Corporation (the “PIPE Transaction”) in exchange for 400 million newly issued shares of Class B common stock of Paramount Skydance Corporation (“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. $4.45 billion of the PIPE Transaction investment was used to fund the cash-stock election discussed below and $1.52 billion of cash was provided to the Company.

The Transactions also included: (1) a transaction pursuant to which each outstanding Skydance membership unit held by Skydance investors and each Skydance 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 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, or one share of Paramount Skydance Corporation Class B Common Stock (“Class B Stock Consideration”). The shares of Paramount 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.

II-3

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Shares of Paramount Skydance Corporation Class B Common Stock now trade on the Nasdaq Stock Market LLC (“Nasdaq”) under the ticker symbol “PSKY.” All shares of Paramount Global Class A Common Stock and Class B Common Stock have been delisted from Nasdaq and have been cancelled and cease to exist.

Holders of shares of Class A common stock of Paramount Skydance Corporation (“Paramount Skydance Corporation Class A Common Stock”) are entitled to one vote per share with respect to all matters on which the holders of Paramount Skydance Corporation common stock are entitled to vote. Holders of Paramount Skydance Corporation Class B Common Stock do not have voting rights. Following the closing of the Transactions and the NAI Transaction, NAI, which was renamed Harbor Lights Entertainment, Inc., and its subsidiaries held 100.0% of the Paramount Skydance Corporation Class A Common Stock. Accordingly, entities controlled by the Ellison Family (as defined below) indirectly hold approximately 77.5% of the Paramount 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 of Paramount. For the purpose of determining the controlling ownership of Paramount, the Ellison family is comprised of Lawrence Ellison and David Ellison (the “Ellison Family”). David Ellison is the son of Lawrence Ellison, and Lawrence Ellison and David Ellison are accordingly considered immediate family members. The Ellison Family either individually or through ownership of various entities are collectively the ultimate parent of Paramount (“Ultimate Parent”).

Pushdown of Ultimate Parent’s Basis— At the time Paramount Global and Skydance became subsidiaries of Paramount Skydance Corporation, the Ellison Family controlled both Paramount Global and Skydance, and as a result, this transaction has been accounted for as a transaction between entities under common control. As a 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. As a result, the net assets of Paramount Global were recorded at their fair value as of this date. Since the net assets of Skydance were already at the Ultimate Parent’s basis, no adjustment to the fair value of net assets was necessary, and Skydance was combined with Paramount Global’s net assets at the Ultimate Parent’s basis as of this date.

Our consolidated financial statements and footnote disclosures are presented in distinct periods to indicate the pushdown of the Ultimate Parent’s basis, which resulted in a new basis of accounting. The periods prior to the closing of the Transactions include only Paramount Global and are identified as “Predecessor,” and the periods beginning on August 7, 2025 reflect Paramount Skydance Corporation and are identified as “Successor.” Due to the application of pushdown accounting, the results of operations, financial position and cash flows are not comparable between the Successor and Predecessor periods. Paramount Global has been identified as the predecessor entity to Paramount Skydance Corporation based on the relative size and fair value of Paramount Global and Skydance, and the fact that Paramount Global was an existing publicly traded company prior to the completion of the Transactions. No single factor was the sole determinant in the overall conclusion that Paramount Global is the predecessor; rather all factors were considered in arriving at such conclusion.

We have certain contracts that require us to obtain consents from other parties in connection with the Transactions. If these consents cannot be obtained, the counterparties to these contracts (and, as a result, other third parties with which we have contractual agreements) may have the right to terminate, reduce the scope of or otherwise alter their relationships with us following the Transactions. Accordingly, the failure to obtain such consents could have a material adverse effect on our business, financial condition and results of operations.

II-4

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Warner Bros. Offer—On December 8, 2025, we announced a cash tender offer for all of the outstanding shares of Series A Common Stock, par value $0.01 per share (the “Warner Bros. Shares”), of Warner Bros. Discovery, Inc., a Delaware corporation (“Warner Bros.”), at $30.00 per Warner Bros. Share (the “Offer”).

The Offer is subject to several conditions and is scheduled to expire on March 2, 2026, unless further extended. On December 22, 2025, we amended the Offer to include an irrevocable personal guarantee from Lawrence Ellison of the equity financing for the Offer and any damages payable by us. On February 10, 2026, we further amended the Offer to provide for a $0.25 per Warner Bros. Share in cash ticking fee for every quarter the transaction does not close beyond December 31, 2026, and a prepayment of the $2.8 billion termination fee payable by Warner Bros. to Netflix, Inc., a Delaware corporation (“Netflix”), upon termination of the merger agreement between Warner Bros. and Netflix. On January 22, 2026, we filed preliminary proxy materials with the U.S. Securities and Exchange Commission (“SEC”) to solicit Warner Bros. stockholders to vote against the Netflix transaction and related proposals at the special meeting of Warner Bros. stockholders, and on February 17, 2026, we filed definitive proxy materials related thereto.

On February 24, 2026, we submitted a revised proposal to the Warner Bros. Board that included an increased purchase price of $31.00 per Warner Bros. Share, accelerated the timing of the daily ticking fee of $0.25 per Warner Bros. Share per quarter to commence after September 30, 2026, and increased the regulatory termination fee payable by us to $7.0 billion if the transaction does not close due to regulatory matters. On the same date, the Warner Bros. Board determined that our revised proposal could reasonably be expected to lead to a “Company Superior Proposal” as defined in the Netflix merger agreement, although no final determination has been made as to whether our proposal is superior to the Netflix merger.

We have secured commitments for debt financing of up to $57.5 billion and equity commitments from entities controlled by the Ellison Family and affiliates of RedBird Capital Partners of $46.6 billion.

II-5

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Significant components of management’s discussion and analysis of results of operations and financial condition include:

•Overview—Summary of our business and operational highlights.

•Consolidated Results of Operations—Analysis of our results on a consolidated basis for the period from August 7 - December 31, 2025 (Successor) and for the period from January 1 - August 6, 2025, and the year ended December 31, 2024 (Predecessor).

•Segment Results of Operations—Analysis of our results on a reportable segment

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