Merged Paramount+, HBO Max Will Be 'Streaming Powerhouse,' Analyst Say

Key Points:

• David Ellison’s Paramount has successfully secured the Warner Bros. Discovery merger, with the deal expected to close in about two weeks following a settlement with Democratic state attorneys general resolving antitrust concerns.
• The merger creates a streaming powerhouse by combining HBO Max and Paramount+, projected to reach over 240 million subscribers by 2030 and potentially challenge Disney and Amazon for the 2nd and 3rd spots in premium SVOD behind Netflix.
• The combined company faces a significant debt load, estimated at $77.2 billion by the end of 2026, but Morgan Stanley analysts expect it can reduce leverage through cost savings exceeding $6 billion via consolidation and efficiencies.
• Free cash flow is forecasted to rise substantially, from $2.16 billion in 2017 to $8.12 billion in 2030, enabling the company to lower its net debt to EBITDA ratio from 6-7x at closing to 3-4x within three years.
• The merged entity will shift focus toward faster-growing streaming and studio businesses, with linear TV networks' contribution to EBITDA falling below 50% by 2028 and to around 30% by 2030, leveraging strong IP franchises like Game of Thrones and Harry Potter.