Paramount Skydance (PSKY) risk factors, FY2025 10-K

Other

1. 01Unregistered Sales of Equity Securities
2. 02(Tabular dollars in millions, except per share amounts)
3. 03Shares 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
4. 04Consolidated Results of Operations 2025 2025 2024
5. 05Adjusted diluted EPS from continuing operations $ .01 $ .51 $ 1.54
6. 06Reconciliation of Non-GAAP Measures
7. 07Other corporate matters (a)
8. 08Period From August 7 - December 31, 2025
9. 09Period From January 1 - August 6, 2025
10. 10(b) Both periods reflect severance charges and also included in the period from January 1 - August 6, 2025 are charges for the impairment of lease assets, as further described under Restructuring, Transaction-Related Items, and Other Corporate Matters
11. 11Year Ended December 31, 2024
12. 12(b) Reflects a goodwill impairment charge for the Cable Networks reporting unit of $5.98 billion, as well as charges totaling $149 million to reduce the carrying values of FCC licenses to their estimated fair values and Australian broadcast licenses to their estimated fair values
13. 13(d) Reflects legal and advisory fees relating to the Transactions
14. 14(f) Principally reflects a loss on the sale of Paramount Global’s investment in Viacom18 of $13 million
15. 152025 2025 2024 2025 2024 $ %
16. 16Total Revenues $ 12,269 $ 16,622 $ 29,213 $ 29,394 $ 30,271 $ (877) (3) %
17. 17Affiliate and subscription
18. 18Affiliate and subscription revenues during each of the Successor and Predecessor periods in 2025 and 2024 reflect the benefit from subscriber growth and pricing increases for Paramount+ but were negatively impacted by linear subscriber declines. At December 31, 2025, there were 78.9 million Paramount+ subscribers
19. 19During the fourth quarter of 2025, in connection with a review of our content portfolio following the closing of the Transactions, we decided to abandon certain Skydance content, principally development projects. As a result, we recorded programming charges totaling $41 million associated with this abandonment
20. 20administrative expenses $ 2,594 $ 3,526 $ 6,658
21. 21Depreciation and amortization $ 590 $ 204 $ 392
22. 22During the 2025 Predecessor period, an impairment charge of $157 million was recorded reflecting a charge to reduce the carrying values of FCC licenses in certain markets to their estimated fair values at June 30, 2025
23. 23Transaction-Related Items
24. 24Interest income $ 64 $ 83 $ 151
25. 25Provision for/Benefit from Income Taxes
26. 26operations $ (.53) $ (.05) $ (9.36)
27. 27Supplemental Pro Forma Revenues—Consolidated
28. 28(a)Reflects Skydance revenues after the elimination of intercompany revenues from Paramount Global during the applicable Predecessor period
29. 29Throughout 2025, the Company was comprised of the below segments
30. 30Total Operating Income (Loss) $ (95) $ 1,029 $ (5,269)
31. 31Total $ 2,952 $ 4,180 $ 7,132 $ 8,180 $ (1,048) (13) %
32. 32Content costs for the Successor period reflect a net reduction in programming assets resulting from the pushdown of the Ultimate Parent’s basis and for the year ended December 31, 2024 include costs associated with the 2024 Super Bowl broadcast
33. 33Revenues $ 2,897 $ 4,166 $ 7,063 $ 5,896 $ 1,167 20%
34. 34(b) Primarily reflects revenues from the sublicensing of content by BET+
35. 35Advertising revenues during the 2025 periods reflect the impact on pricing from new digital advertising entrants in the marketplace and in 2024 benefited from political revenues associated with the 2024 U.S. Presidential election and the broadcast of Super Bowl LVIII in the first quarter of 2024
36. 36Adjusted OIBDA $ (132) $ (100) $ (96)
37. 37(b) Primarily reflects advertising revenues earned from the use of Filmed Entertainment content on third-party digital platforms
38. 38Supplemental Pro Forma Revenues—Filmed Entertainment
39. 39In connection with the Transactions, $1.52 billion of cash from the PIPE Transaction was provided to the Company, which was used to pay Paramount Global’s transaction-related costs and to pay down borrowings of $720 million outstanding under Skydance’s revolving credit facility
40. 40Net cash flow provided by operating activities $ 485 $ 164 $ 752
41. 41Net (decrease) increase in cash and cash equivalents $ (577) $ (201) $ 201
42. 42(a) Includes payments associated with the implementation of our transformation initiatives of $1 million for the 2025 Successor period, $2 million for the 2025 Predecessor period, and $22 million for 2024
43. 43Mandatory Convertible Preferred Stock
44. 44Total long-term debt, net of current portion $ 13,225 $ 14,501
45. 45At December 31, 2025 (Successor), our junior debt was comprised of $628 million 6.25% junior subordinated debentures due 2057 and $989 million 6.375% junior subordinated debentures due 2062
46. 46debentures can be called by us at par plus a make whole premium any time before March 30, 2027, or at par on March 30, 2027 or on any interest payment date thereafter
47. 47Supplemental Guarantor Financial Information
48. 48Letters of Credit and Surety Bonds
49. 49Critical Accounting Estimates
50. 50Pushdown of Ultimate Parent’s Basis
51. 51Film and Television Production and Programming Costs
52. 52For acquired television and film libraries, our estimate of Ultimate Revenues includes revenues to be earned within 20 years from the date of acquisition
53. 53Goodwill Impairment Tests
54. 542025 Annual Impairment Test (Successor)
55. 55the reporting units’ carrying amounts. We also considered significant industry trends and developments, as well as macroeconomic and market factors, including changes in interest rates and changes in our market capitalization
56. 562024 Impairment Tests (Predecessor)
57. 57FCC Licenses—Change in Accounting Estimate
58. 58FCC Licenses—Impairment Tests (Predecessor)
59. 59Annual Impairment Test (Predecessor)

Market Risk

1. 60in “Other items, net” on the Consolidated Statements of Operations. We manage the use of foreign exchange derivatives centrally
2. 61INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
3. 62MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
4. 63Opinions on the Financial Statements and Internal Control over Financial Reporting
5. 64Definition and Limitations of Internal Control over Financial Reporting
6. 65Accounting for the change in control and valuation of certain trade names and affiliate relationships
7. 66Amortization of Certain Internally-Produced Television Programming Costs
8. 67Opinions on the Financial Statements
9. 68Revenues $ 12,269 $ 16,622 $ 29,213 $ 29,652
10. 69Net loss attributable to Parent $ (586) $ (35) $ (6,190) $ (608)
11. 70Net loss $ (.53) $ (.05) $ (9.34) $ (1.02)
12. 71(Parent and noncontrolling interests) $ (540) $ 412 $ (6,149) $ (576)
13. 72LIABILITIES AND STOCKHOLDERS’ EQUITY
14. 73Commitments and contingencies (Note 18)
15. 74Treasury stock, at cost; — (2025) and 503 (2024) shares of Class B Common Stock
16. 75Adjustments to reconcile net earnings (loss) from continuing operations to net cash flow provided by
17. 76Net cash flow provided by operating activities 485 164 752 475
18. 77Net cash flow (used for) provided by investing activities (160) (276) 12 942
19. 781) DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
20. 79References to “Paramount,” the “Company,” “we,” “us” and “our” refer to Paramount Skydance Corporation and its consolidated subsidiaries, unless the context otherwise requires
21. 80Global 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
22. 81Discontinued Operations—Simon & Schuster, which was sold during the fourth quarter of 2023 (Predecessor), is presented as a discontinued operation in our consolidated financial statements for all periods presented (see Note 19)
23. 82Reclassifications—Certain amounts reported for prior periods have been reclassified to conform to the current year’s presentation
24. 83Cash and Cash Equivalents—Cash and cash equivalents consist of cash on hand and highly liquid investments with maturities of three months or less at the date of purchase, including money market funds, U.S. Treasury bills, and bank time deposits
25. 84Game development costs are capitalized once the game reaches technological feasibility and amortized upon its release over the expected life of the game. Unamortized capitalized game development costs are reported in “Programming and other inventory” on the Consolidated Balance Sheets
26. 85Television and feature film programming and production costs, including inventory amortization, development costs, residuals and participations and impairment charges that occur as part of our normal operations are included within “Operating expenses” on the Consolidated Statements of Operations
27. 86Costs associated with repairs and maintenance of property and equipment are expensed as incurred
28. 87Treasury Stock—Treasury stock is accounted for using the cost method. Retirements of treasury stock are reflected as a reduction to additional paid-in capital
29. 88Revenue is recognized when control of a good or service is transferred to a customer. Control is considered to be transferred when the customer has the ability to direct the use of and obtain substantially all of the remaining benefits of that good or service
30. 89Theatrical Revenues—Theatrical revenue is earned from the theatrical distribution of our films during the exhibition period. Under these arrangements, revenues are recognized based on sales to the end customer
31. 90events; revenues from games and other interactive content; and revenues from studio rentals and production services
32. 91Amounts attributable to transactions arising from collaborative arrangements between participants were not material to the consolidated financial statements for any period presented
33. 92Interest—Costs associated with the refinancing or issuance of debt, as well as debt discounts or premiums, are recorded as interest over the term of the related debt
34. 93included the issuance of common shares in the weighted average number of shares and excluded the above-mentioned preferred stock dividend adjustment to net earnings (loss) available to common stockholders
35. 94Year Ended December 31, 2024 2023
36. 95EPS calculation $ (6,218) $ (1,342)
37. 96Net loss for basic and diluted EPS calculation $ (6,204) $ (666)
38. 97Disaggregation of Income Statement Expenses
39. 98Internal-use Software Costs
40. 992) PUSHDOWN OF ULTIMATE PARENT'S BASIS
41. 100Preliminary Measurement Period Adjustments Preliminary, Revised
42. 101Total assets $ 41,525 $ 72 $ 41,597
43. 102Paramount Global basis at August 7, 2025 $ 11,588 $ 107 $ 11,695
44. 103(g) “Programming Obligations” include $520 million recorded to establish liabilities for unfavorable contractual arrangements
45. 104In process and other 1,935 2,292
46. 105Produced television and film
47. 106Licensed program rights $ 2,213 $ 396 $ 156
48. 107The fair values of the remaining reporting units exceeded their respective carrying values and therefore no impairment charge was required
49. 108Interim Impairment Tests (Predecessor)
50. 109In 2024 and 2023, we performed annual impairment tests for each of our 14 markets. We performed qualitative assessments for nine and six television markets and quantitative impairment tests for the remaining five and eight markets for 2024 and 2023, respectively
51. 110Balance at August 6, 2025 (Predecessor) 5,140 2,728 2,620 10,488
52. 111(a) The carrying amount of goodwill at the TV Media segment for the Predecessor periods included accumulated impairment losses of $19.34 billion and $13.35 billion at December 31, 2024 and 2023, respectively
53. 112Amortization expense $ 493 $ 15 $ 28 $ 35
54. 113inception 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
55. 114Total $ 192 $ 488 $ (331) $ 349
56. 115Other Corporate Matters (Predecessor)
57. 116The Ellison Family (Successor)
58. 117Unrecognized Revenues Under Contract
59. 118Performance Obligations Satisfied in Previous Periods
60. 119During the fourth quarter of 2024 (Predecessor), we redeemed our $126 million of outstanding 4.75% senior notes due in 2025 at par
61. 120Long-Term Debt Maturities
62. 121Noncash additions to operating lease assets $ 146 $ 82 $ 130 $ 123
63. 122Present value of minimum payments $ 1,434
64. 12311) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
65. 124During the Successor period from August 7 - December 31, 2025 (Successor), we recorded $40 million to write off investments due to recent indications that these investments are no longer recoverable
66. 125Foreign Exchange Contracts
67. 126In 2024, we entered into a foreign currency option contract to mitigate the exchange rate risk of the Indian rupee-denominated sale of our interest in Viacom18 discussed above, and recognized a total loss of $5 million on this contract, which is included in the table below
68. 127exchange contracts $ (4) $ (24) $ 13 $ (10) Other items, net
69. 128December 31, 2025 December 31, 2024
70. 129Total Liabilities $ 340 $ 433
71. 13012) VARIABLE INTEREST ENTITIES
72. 131Impact from the Transactions— Common Stock
73. 132In 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
74. 133Mandatory Convertible Preferred Stock (Predecessor)
75. 134Common Stock Conversion Rights (Predecessor)
76. 135Adjustments to Paramount Global’s basis 542
77. 136(e) In connection with the change in control of Paramount Global that established a new accounting basis, the historical equity of Paramount Global was reversed
78. 13714) STOCK-BASED COMPENSATION
79. 138Stock-based compensation expense, net of tax benefit $ 132 $ 88 $ 208 $ 142
80. 139RSUs, Restricted Stock and PSUs
81. 140At the closing of the Transactions, all outstanding Paramount Global RSU awards and PSU awards were converted to Paramount RSU awards. There were no PSUs outstanding at December 31, 2025
82. 141Total unrecognized compensation cost related to non-vested RSUs and restricted stock at December 31, 2025 was $721 million, which is expected to be recognized over a weighted average period of 3.95 years
83. 142There were no stock option exercises during the Successor and Predecessor periods from August 7 - December 31, 2025, January 1 - August 6, 2025, and the years ended December 31, 2024 and 2023
84. 143Total current 75 322 325 289
85. 144In addition, for the Predecessor periods, net earnings from discontinued operations included income tax provisions of $5 million and $249 million for the years ended 2024 and 2023, respectively
86. 145Other foreign jurisdictions 17 (3.6) % 21 4.2 %
87. 146Deferred income tax assets, net of valuation allowance 2,466 1,863
88. 147Deferred income tax assets, net $ 1,197 $ 1,352
89. 148At December 31, 2025 (Successor) $ 431
90. 14916) PENSION AND OTHER POSTRETIREMENT BENEFITS
91. 150Pension Benefits Postretirement Benefits
92. 151Funded status at end of year $ (1,085) $ (1,129) $ (156) $ (165)
93. 152Our qualified pension plans were underfunded by $255 million and $347 million at December 31, 2025 (Successor) and December 31, 2024 (Predecessor), respectively
94. 153Weighted average assumptions used to determine
95. 154Exchange Traded Fund (ETF) 4 — 4
96. 155Mortgage-backed and asset-backed securities — 156 156
97. 156Investments, at fair value $ 2,352
98. 157(b) Securities of diverse sectors and industries, substantially all investment grade
99. 158(d) Underlying investments consist mainly of U.S. large capitalization and international equity securities
100. 159Retiree Medicare drug subsidy $ 3 $ 3 $ 2 $ 2 $ 2 $ 4
101. 160Multiemployer Pension and Postretirement Benefit Plans
102. 161Total contributions $ 66 $ 76 $ 165 $ 151
103. 162As a result of the above noted zone status there were no funding improvements or rehabilitation plans implemented, as defined by ERISA, nor any surcharges imposed for any of the individual plans listed
104. 163Defined Contribution Plans
105. 164Total Revenues $ 12,269 $ 16,622 $ 29,213 $ 29,652
106. 165(c) Other segment expenses for our Filmed Entertainment segment 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
107. 166Off-Balance Sheet Arrangements
108. 167On-Balance Sheet Arrangements
109. 168$ 1,761 $ 1,124 $ 372 $ 192 $ 59 $ 14
110. 169Litigation Relating to the Transactions
111. 170Litigation Related to Distribution Agreements
112. 171Contingent Liabilities Relating to Former Businesses
113. 172Cash paid for interest $ 296 $ 524 $ 833 $ 901
114. 173Total cash paid for income taxes $ 70 $ 201 $ 184 $ 107
115. 174Discontinued Operations (Predecessor)
116. 175(a) Primarily relates to indemnification obligations for leases associated with the previously discontinued operations of Famous Players Inc
117. 176Directors, Executive Officers and Corporate Governance
118. 177Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
119. 178Description Balance at Beginning of Period Charged to Expenses and Other Accounts Deductions Balance at End of Period
120. 179Year ended December 31, 2023 (Predecessor) $ 111 $ 26 $ 17 $ 120
121. 180(2) Plan of acquisition, reorganization, arrangement, liquidation or succession
122. 181Amended and Restated Bylaws of Paramount Skydance Corporation, effective as of August 7, 2025 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Paramount Skydance Corporation filed August 7, 2025) (File No. 001-42791)
123. 182Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (filed herewith)
124. 183First Supplemental Indenture to 2008 Indenture, dated as of April 5, 2010, among CBS Corporation, CBS Operations Inc., and Deutsche Bank Trust Company Americas, as senior trustee (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8‑K of CBS Corporation filed April 5, 2010) (File No. 001‑09553)
125. 184Exhibit No. Description of Document
126. 185Twenty-Second Supplemental Indenture, dated as of August 7, 2025, to the 2006 Indenture, by and between Paramount Global and The Bank of New York Mellon (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K of Paramount Skydance Corporation filed August 7, 2025) (File No. 001-42791)
127. 186First Supplemental Indenture, dated as of August 7, 2025, to the 2017 Indenture, by and between Paramount Global and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 4.7 to the Current Report on Form 8-K of Paramount Skydance Corporation filed August 7, 2025) (File No. 001-42791)
128. 187First Supplemental Indenture, dated as of August 7, 2025, to the 2020 Indenture, by and between Paramount Global and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 4.9 to the Current Report on Form 8-K of Paramount Skydance Corporation filed August 7, 2025) (File No. 001-42791)
129. 188Amendment No. 6 to the Credit Agreement, dated as of December 18, 2025, by and among the parties listed therein (filed herewith)
130. 189Certification of the Chief Executive Officer of Paramount Skydance Corporation pursuant to Rule 13a‑14(a) or 15d‑14(a), as adopted pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002 (filed herewith)
131. 190Certification of the Chief Executive Officer of Paramount Skydance Corporation furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002 (furnished herewith)
132. 191____________________________________