Paramount Skydance Corporation · 10-Q · Item 2 MD&A

Item 2.

Management’s Discussion and Analysis of Results of Operations and Financial Condition.

(Tabular dollars in millions, except per share amounts)

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. T1The 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

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.

T2We 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

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 Corporation (the “PIPE Transaction”) 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. $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 Skydance 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

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

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.

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 Skydance 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 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 and 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 values 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.

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 Paramount Skydance

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

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

We have certain contracts that require us to obtain consents from other parties in connection with the NAI

Transaction and the Skydance 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. Accordingly, the failure to obtain such

consents could have a material adverse effect on our business, financial condition and results of operations.

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 three and six

months ended June 30, 2026 (Successor), including a comparison to the three and six months ended

•Segment Results of Operations—Analysis of our results on a reportable segment basis for the three and six

•Liquidity and Capital Resources—Discussion of our cash flows, including sources and uses of cash, for the

six months ended June 30, 2026 (Successor), including a comparison to the six months ended June 30,

2025 (Predecessor), and of our outstanding debt as of June 30, 2026 (Successor), including Supplemental

Guarantor Financial Information.

•Legal Matters—Discussion of legal matters to which we are involved.

Overview

Successor

Predecessor

Three Months

Ended June 30,

Three Months

Ended June 30,

Increase/(Decrease)

Consolidated Results of Operations

$

%

GAAP:

Revenues

1%

Operating income

Net earnings attributable to Parent

Diluted EPS

Non-GAAP: (a)

Adjusted EBITDA

Adjusted net earnings attributable to Parent

Adjusted diluted EPS

(a) See “Reconciliation of Non-GAAP Measures” for reconciliations of these non-GAAP measures to the most directly comparable

financial measures in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or

“GAAP”).

Revenues increased 1% to $6.91 billion, reflecting growth at Paramount+ and higher licensing revenues, driven by

the inclusion of Skydance and increases in revenues from secondary market licensing and content produced for

third parties. These increases were partially offset by lower revenues from our linear networks and from theatrical

releases, reflecting the comparison to the second quarter 2025 release of Mission: Impossible - The Final

Reckoning.

T3Skydance is included in our results in periods following the close of the Skydance Transactions. In addition, as a

result of the pushdown of the Ultimate Parent’s basis, operating income, net earnings attributable to Parent, and

diluted EPS in 2026 include amortization associated with the establishment of intangible assets and also reflect the

net decrease in programming assets. Net earnings and diluted EPS also include interest expense associated with the

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

adjustment of our debt to its fair value. See Note 2 to the consolidated financial statements for details relating to

the pushdown of the Ultimate Parent’s basis.

Operating income of $475 million for the three months ended June 30, 2026 increased 19%. Operating income in

2026 includes transaction-related items of $153 million and restructuring charges of $35 million while 2025

includes restructuring charges and transaction-related items totaling $181 million and an impairment charge of

$157 million. The comparison also reflects higher revenue and lower content costs, including from reductions in

programming assets resulting from the pushdown of the Ultimate Parent’s basis, partially offset by amortization of

intangible assets.

Net earnings attributable to Parent of $41 million, or $.04 per diluted share decreased 28% compared with net

earnings attributable to Parent of $57 million, or $.08 per diluted share, for the same prior-year period as the

increase in operating income was more than offset by a higher tax provision and higher interest expense. Adjusted

net earnings attributable to Parent, which excludes the restructuring charges, transaction-related items, and

impairment charges noted above, decreased 35% to $205 million, or $.18 per diluted share from $315 million, or

$.46 per diluted share. The decreases in diluted EPS and adjusted diluted EPS also reflect shares issued in

connection with the Skydance Transactions and the NAI Transaction. See Reconciliation of Non-GAAP Measures

for the definition of adjusted net earnings attributable to Parent and a reconciliation to net earnings attributable to

Parent.

Adjusted EBITDA grew 27% primarily reflecting the lower content costs from reductions in programming assets

resulting from the pushdown of the Ultimate Parent’s basis and cost savings for our linear programming, partially

offset by lower revenues from our linear networks. See Reconciliation of Non-GAAP Measures for the definition of

Adjusted EBITDA and a reconciliation to net earnings attributable to Parent, the most directly comparable

financial measure in accordance with U.S. GAAP.

Successor

Predecessor

Six Months

Ended June 30,

Six Months

Ended June 30,

Increase/(Decrease)

Consolidated Results of Operations

$

%

GAAP:

Revenues

2%

Operating income

Net earnings attributable to Parent

$—

—%

Diluted EPS

Non-GAAP: (a)

Adjusted EBITDA

Adjusted net earnings attributable to Parent

(9)%

Adjusted diluted EPS

(a) See “Reconciliation of Non-GAAP Measures” for reconciliations of these non-GAAP measures to the most directly comparable

financial measures in accordance with U.S. GAAP.

Revenues increased 2% to $14.26 billion, driven by growth at Paramount+ and higher licensing revenues,

principally from the inclusion of Skydance in the current year, partially offset by lower revenues from our linear

networks and theatrical releases.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

As discussed above, periods following the closing of the Skydance Transactions on August 7, 2025 reflect the

inclusion of Skydance and the effects of the pushdown of the Ultimate Parent’s basis.

Operating income of $1.09 billion for the six months ended June 30, 2026 increased 15%, driven by lower content

costs from reductions in programming assets resulting from the pushdown of the Ultimate Parent’s basis and lower

compensation and marketing costs from the impact from cost savings initiatives, partially offset by amortization of

intangible assets. Operating income in 2026 also includes transaction-related items of $256 million and

restructuring costs of $35 million while 2025 includes restructuring charges and transaction-related items totaling

$266 million, an impairment charge of $157 million and gain on dispositions totaling $35 million.

Net earnings attributable to Parent was $209 million, or $.19 per diluted share for the six months ended June 30,

2026 compared with net earnings attributable to Parent of $209 million, or $.31 per diluted share, for the same

prior-year period. Adjusted net earnings attributable to Parent, which excludes certain items identified as affecting

comparability that are not part of our normal operations including the restructuring and transaction-related items

and impairment charges noted above decreased 9% to $466 million, or $.42 per diluted share from $510 million, or

$.75 per diluted share. The decrease in diluted EPS and adjusted diluted EPS reflects shares issued in connection

with the Skydance Transactions and the NAI Transaction. See Reconciliation of Non-GAAP Measures for the

definition of adjusted net earnings attributable to Parent and a reconciliation to net earnings attributable to Parent.

Adjusted EBITDA grew 42% primarily reflecting lower content costs from cost savings for our linear

programming and reductions in programming assets resulting from the pushdown of the Ultimate Parent’s basis, as

well as lower compensation and marketing costs, partially offset by lower revenues from our linear networks. See

Reconciliation of Non-GAAP Measures for the definition of Adjusted EBITDA and a reconciliation to net earnings

attributable to Parent, the most directly comparable financial measure in accordance with U.S. GAAP.

We are exposed to political risks inherent in conducting a global business such as retaliatory actions by

governments reacting to changes in the U.S. and other countries, including in connection with the imposition of

tariffs and other changes in trade policies, as well as from the conflict involving the U.S., Israel and Iran. Growing

macroeconomic uncertainty may negatively affect our results, in particular from potential impacts on the

advertising market.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Reconciliation of Non-GAAP Measures

In the first quarter of 2026 we transitioned our non-GAAP profitability measure from Adjusted operating income

before depreciation and amortization (Adjusted OIBDA) to Adjusted EBITDA, which we define 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. This change was made to align with how management began measuring the Company’s

ongoing operating performance in 2026. While both adjusted measures exclude items identified as affecting

comparability that are not part of our normal operations, including programming charges, impairment charges,

restructuring charges, transaction-related items, other corporate matters, and gain (loss) on dispositions, each where

applicable, Adjusted EBITDA, as we define it, also excludes stock-based compensation, which is a noncash

expense that management does not consider to be part of our underlying operating performance. Net earnings (loss)

attributable to Parent is the most directly comparable financial measure in accordance with U.S. GAAP. Adjusted

earnings before income taxes, adjusted provision for income taxes, adjusted net earnings attributable to Parent,

adjusted diluted EPS, and adjusted effective income tax rate are also measures of performance not calculated in

accordance with U.S. GAAP (together with Adjusted EBITDA, the “adjusted measures”), and exclude certain

items identified as affecting comparability that are not part of our normal operations, including the items described

above, as well as gain (loss) from investments and discrete tax items, each where applicable.

We use these adjusted measures to, among other things, evaluate our operating performance. These measures are

among the primary measures used by management for planning and forecasting of future periods, and they are

important indicators of our operational strength and business performance. In addition, we use Adjusted EBITDA

to, among other things, value prospective acquisitions. We believe these measures are relevant and useful for

investors because they allow investors to view our performance in a manner consistent with the method used by

our management; and because they exclude items that are not representative of our normal operations, they provide

a clearer perspective on underlying performance, and make it easier for investors, analysts and peers to compare

our operating performance to other companies in the industry and to compare our results across reporting periods.

Because the adjusted measures are measures of performance not calculated in accordance with U.S. GAAP, they

should not be considered in isolation of, or as a substitute for, our results as reported under U.S. GAAP, including

net earnings (loss), (provision for) benefit from income taxes, net earnings (loss) attributable to Parent, diluted

EPS, and effective income tax rate, as applicable, as indicators of operating performance and undue reliance should

not be placed on these adjusted measures. Other companies may define these measures, including Adjusted

EBITDA, differently and, as a result, our adjusted measures may not be directly comparable to similarly titled

measures of other companies.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

The following tables reconcile the adjusted measures to their most directly comparable financial measures in

accordance with U.S. GAAP. The tax impacts on the items identified as affecting comparability in the tables below

have been calculated using the tax rate applicable to each item.

Successor

Predecessor

Successor

Predecessor

Three Months

Ended June 30,

Three Months

Ended June 30,

Six Months

Ended June 30,

Six Months

Ended June 30,

Net earnings attributable to Parent (GAAP)

Net earnings attributable to

noncontrolling interests

—

4

7

Equity in loss of investee companies,

net of tax

Provision for income taxes

Other items, net

Interest expense, net

Gain on dispositions (a)

—

—

—

Transaction-related items (a)

4

Restructuring charges (a)

Impairment charges (a)

—

—

Stock-based compensation

Depreciation and amortization

Adjusted EBITDA (Non-GAAP)

(a) See notes on the following tables for additional information on items affecting comparability.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Successor

Earnings Before

Income Taxes

Provision for

Income Taxes

Net Earnings

Attributable to

Parent

Diluted EPS

Reported (GAAP)

(c)

Items affecting comparability:

Restructuring charges (a)

(5)

Transaction-related items (b)

Discrete tax items

—

(4)

(4)

—

Adjusted (Non-GAAP)

(c)

(a) Reflects severance costs, as further described under Restructuring and Transaction-Related Items.

(b) Principally reflects legal, advisory, and other professional fees associated with the planned WBD Merger and related

integration.

(c) The reported effective income tax rate for the three months ended June 30, 2026 was 55.8% and the adjusted effective income

tax rate, which is calculated as the adjusted provision for income taxes of $144 million divided by adjusted earnings before

income taxes of $403 million, was 35.7%. These adjusted measures exclude the items affecting comparability detailed above.

Predecessor

Earnings Before

Income Taxes

Provision for

Income Taxes

Net Earnings

Attributable to

Parent

Diluted EPS

Reported (GAAP)

(d)

Items affecting comparability:

Impairment charges (a)

Restructuring charges (b)

Transaction-related items (c)

4

(1)

3

Discrete tax items

—

2

2

—

Adjusted (Non-GAAP)

(d)

(a) Reflects a charge to reduce the carrying values of FCC licenses in certain markets to their estimated fair values.

(b) Reflects severance costs, as further described under Restructuring and Transaction-Related Items.

(c) Reflects legal, advisory, and other professional fees relating to the Skydance Transactions.

(d) The reported effective income tax rate for the three months ended June 30, 2025 was 28.1% and the adjusted effective income

tax rate, which is calculated as the adjusted provision for income taxes of $130 million divided by adjusted earnings from

continuing operations before income taxes of $516 million, was 25.2%. These adjusted measures exclude the items affecting

comparability detailed above.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Successor

Earnings Before

Income Taxes

Provision for

Income Taxes

Net Earnings

Attributable to

Parent

Diluted EPS

Reported (GAAP)

(c)

Items affecting comparability:

Restructuring charges (a)

(5)

Transaction-related items (b)

Discrete tax items

—

(8)

(8)

Adjusted (Non-GAAP)

(c)

(a) Reflects severance costs, as further described under Restructuring and Transaction-Related Items.

(b) Principally reflects legal, advisory and other professional fees associated with the planned WBD Merger and related

integration.

(c) The reported effective income tax rate for the six months ended June 30, 2026 was 45.3% and the adjusted effective income

tax rate, which is calculated as the adjusted provision for income taxes of $309 million divided by adjusted earnings before

income taxes of $898 million, was 34.4%. These adjusted measures exclude the items affecting comparability detailed above.

Predecessor

Earnings Before

Income Taxes

Provision for

Income Taxes

Net Earnings

Attributable to

Parent

Diluted EPS

Reported (GAAP)

(e)

Items affecting comparability:

Impairment charges (a)

Restructuring charges (b)

Transaction-related items (c)

(1)

Gain on dispositions (d)

2

Discrete tax items

—

9

9

Adjusted (Non-GAAP)

(e)

(a) Reflects a charge to reduce the carrying values of FCC licenses in certain markets to their estimated fair values.

(b) Includes severance costs and charges for the impairment of lease assets, as further described under Restructuring and

Transaction-Related Items.

(c) Reflects legal, advisory, and other professional fees relating to the Skydance Transactions.

(d) Principally reflects a gain associated with the disposition of a noncore business.

(e) The reported effective income tax rate for the six months ended June 30, 2025 was 29.3% and the adjusted effective income

tax rate, which is calculated as the adjusted provision for income taxes of $237 million divided by adjusted earnings before

income taxes of $900 million, was 26.3%. These adjusted measures exclude the items affecting comparability detailed above.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Consolidated Results of Operations

Revenues

Three Months Ended June 30,

Successor

Predecessor

% of Total

Revenues

% of Total

Revenues

Increase/(Decrease)

$

%

Revenues by Type:

Advertising

(9)%

Affiliate and

subscription

2

Theatrical

2

4

Licensing and other

Total Revenues

1%

Six Months Ended June 30,

Successor

Predecessor

Increase/(Decrease)

% of Total

Revenues

% of Total

Revenues

$

%

Revenues by Type:

Advertising

(6)%

Affiliate and

subscription

3

Theatrical

2

3

Licensing and other

Total Revenues

2%

Advertising

Advertising revenues are generated primarily from the sale of advertising spots on our global broadcast and cable

networks, television stations, and streaming services.

T4The decreases in advertising revenues of 9% and 6% for the three and six months ended June 30, 2026,

respectively, are primarily due to declines in the linear advertising market and a negative impact of 6% and 3%

from the comparison against CBS’s broadcast in the second quarter of 2025 of the National Semifinals and

National Championship games of the NCAA Division I Men’s Basketball Championship (the “NCAA

Tournament”), which we have the rights to broadcast every other year, partially offset by growth for Paramount+.

Affiliate and subscription

Affiliate and subscription revenues are principally comprised of affiliate fees we receive from distributors for their

carriage of our cable networks (cable affiliate fees) and television stations (retransmission fees), as well as fees

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

received from third-party television stations for their affiliation with the CBS Television Network (reverse

compensation), and subscription fees for our streaming services.

The growth in affiliate and subscription revenues of 2% and 3% for the three and six months ended June 30, 2026,

respectively, reflects increases of 6% in each period from growth at Paramount+, driven by pricing increases and

subscriber growth, partially offset by decreases of 3% in each period from lower linear affiliate revenues.

T5Paramount+ had 81.6 million subscribers at June 30, 2026 and 76.8 million subscribers at June 30, 2025.

Theatrical

The decreases in theatrical revenues of $116 million and $112 million for the three- and six-month periods,

respectively, were driven by the comparison against the second quarter 2025 release of Mission: Impossible - The

Final Reckoning. Theatrical releases in 2026 included Scream 7 in the first quarter and Scary Movie (2026) in the

second quarter.

Licensing and other

Licensing and other revenues are principally comprised of fees from the licensing of the rights to exhibit our

internally-produced television and film programming on various platforms in the secondary market after its initial

exhibition on our owned or third-party platforms; license fees from content produced or distributed for third

parties; home entertainment revenues, which primarily include revenues from the viewing of our content on a

transactional basis through transactional video-on-demand (TVOD) and electronic sell-through services; fees from

the use of our trademarks and brands for consumer products, recreation and live events; revenues from games and

other interactive content; and revenues from studio rentals and production services.

The increases in licensing and other revenues of 30% and 20% for the three and six months ended June 30, 2026,

respectively, were driven by the inclusion of Skydance following the Skydance Transactions in August 2025 and

increases in revenues from secondary market licensing and content produced for third parties.

Operating Expenses

Three Months Ended June 30,

Successor

Predecessor

% of

Operating

Expenses

% of

Operating

Expenses

Increase/(Decrease)

$

%

Operating expenses by Type:

Content costs

(5)%

Distribution and other

(2)

Total Operating Expenses

(4)%

Six Months Ended June 30,

Successor

Predecessor

% of

Operating

Expenses

% of

Operating

Expenses

Increase/(Decrease)

$

%

Operating expenses by Type:

Content costs

(3)%

Distribution and other

(2)

Total Operating Expenses

(3)%

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Content Costs

Content costs include the amortization of costs of internally-produced television content, theatrical film content,

and interactive game development; amortization of acquired program rights; other television production costs,

including on-air talent; and participation and residuals expenses, which reflect amounts owed to talent and other

participants in our content pursuant to contractual and collective bargaining arrangements.

T6The decreases of 5% and 3% for the three- and six-month periods, respectively, primarily reflect reductions in

programming assets resulting from the pushdown of the Ultimate Parent’s basis and other cost reductions for

broadcast and cable programming, including lower costs for the NCAA Tournament, partially offset by the

inclusion of Skydance in the current-year periods and higher sports costs for Paramount+.

Distribution and Other

Distribution and other operating expenses primarily include costs relating to the distribution of our content,

including marketing and other costs to support our theatrical releases; revenue-sharing costs, including for third-

party distribution and to television stations affiliated with the CBS Television Network; compensation; and other

costs associated with our operations.

Distribution and other operating expenses decreased 2% for each of the three- and six-month periods ended

June 30, 2026, primarily reflecting lower costs for the distribution of theatrical releases, driven by costs for

Mission: Impossible - The Final Reckoning in 2025, partially offset by higher revenue sharing costs for our

streaming services, mainly for third-party distribution.

Selling, General and Administrative Expenses

Successor

Predecessor

Three Months

Ended June 30,

Three Months

Ended June 30,

Increase/(Decrease)

$

%

Selling, general and

administrative expenses

3%

Successor

Predecessor

Six Months

Ended June 30,

Six Months

Ended June 30,

Increase/(Decrease)

$

%

Selling, general and

administrative expenses

(3)%

Selling, general and administrative (“SG&A”) expenses include costs incurred for advertising and marketing for

our linear networks and streaming services, research, occupancy, professional service fees, and back office support,

including employee compensation (inclusive of stock-based compensation expense) and technology. SG&A

expenses increased 3% for the three-month period, primarily reflecting higher costs for technology and

professional services. SG&A expenses decreased 3%, for the six-month period, primarily reflecting lower

marketing costs and lower compensation costs resulting from our workforce restructuring activities, partially offset

by higher costs for technology and professional services.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Depreciation and Amortization

Successor

Predecessor

Three Months

Ended June 30,

Three Months

Ended June 30,

Increase/(Decrease)

$

%

Depreciation and amortization

Successor

Predecessor

Six Months

Ended June 30,

Six Months

Ended June 30,

Increase/(Decrease)

$

%

Depreciation and amortization

Depreciation and amortization expense reflects depreciation of fixed assets and amortization of finite-lived

intangible assets. The increase primarily reflects amortization of intangible assets established in connection with

the pushdown of the Ultimate Parent’s basis (See Note 2 to the consolidated financial statements).

Impairment Charges

During the second quarter of 2025, we performed interim impairment tests of FCC licenses in six markets, which

resulted in an impairment charge of $157 million to write down the carrying values of FCC licenses in these

markets to their then aggregate estimated fair value.

Restructuring and Transaction-Related Items

During the three and six months ended June 30, 2026 and 2025, we recorded the following restructuring charges

and transaction-related items.

Successor

Predecessor

Successor

Predecessor

Three Months

Ended June 30,

Three Months

Ended June 30,

Six Months

Ended June 30,

Six Months

Ended June 30,

Severance (a)

Exit costs

—

—

—

Restructuring charges

Transaction-related items

4

Restructuring and transaction-related

items

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

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Restructuring Charges

During the second quarter of 2026, we recorded restructuring severance costs of $35 million associated with

changes in management and aligning 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.

Restructuring charges for the three and six months ended June 30, 2025 included severance costs of $177 million

associated with strategic changes in our global workforce in order to streamline our organization. In addition,

during the six months ended June 30, 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.

Transaction-Related Items

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

acquisitions, as well as related integration activities. During the three and six months ended June 30, 2026, we

recorded transaction-related costs of $153 million and $256 million, respectively, principally for legal, advisory,

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

six months ended June 30, 2025, we recorded legal, advisory, and other professional fees relating to the Skydance

Transactions of $4 million and $24 million, respectively.

Gain on Dispositions

During the first quarter of 2025, we recorded a gain on dispositions totaling $35 million, principally associated

with the disposition of a noncore business.

Interest Expense/Income

Successor

Predecessor

Three Months

Ended June 30,

Three Months

Ended June 30,

Increase/(Decrease)

$

%

Interest expense

Interest income

$(3)

(9)%

Successor

Predecessor

Six Months

Ended June 30,

Six Months

Ended June 30,

Increase/(Decrease)

$

%

Interest expense

Interest income

$(3)

(4)%

In connection with the pushdown of the Ultimate Parent’s basis, our debt was recorded at fair value, which resulted

in a decrease to our total debt balance of $898 million. 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. The weighted average interest rate on our senior and junior debt was 5.20% at June 30, 2026 (Successor)

and 5.17% at June 30, 2025 (Predecessor). In addition, during the three and six months ended June 30, 2026 we

incurred $30 million and $41 million, respectively, of interest expense associated with borrowings under our Credit

Facility (see Capital Structure). Credit facility borrowings outstanding at the closing of the WBD Merger are

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

expected to be repaid with the funding from the private placement described in Note 1 to the consolidated financial

statements.

Other Items, Net

The following table presents the components of “Other items, net.”

Successor

Predecessor

Successor

Predecessor

Three Months

Ended June 30,

Three Months

Ended June 30,

Six Months

Ended June 30,

Six Months

Ended June 30,

Pension and postretirement

benefit costs

Foreign exchange loss

2

5

6

8

Loss on non-designated interest

rate hedges (a)

—

—

Other

3

—

5

—

Other items, net

(a) See Note 8 to the consolidated financial statements.

Provision for Income Taxes

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

taxes and equity in loss of investee companies. For the three and six months ended June 30, 2026 (Successor),

we recorded a provision for income taxes of $120 million and $275 million, reflecting an effective income tax

rate of 55.8% and 45.3%, 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 20.1 percentage points and 10.9 percentage points for their respective periods. The higher tax rate in each

period compared with the same periods of 2025 also reflects an increase in foreign earnings subject to current

U.S. tax, along with a reduced benefit from the foreign-derived intangible income deduction.

Impact from Items Affecting Comparability

Successor

Earnings (Loss)

Before Income

Taxes

Benefit from

(Provision for)

Income Taxes

Earnings

(Loss) Before

Income Taxes

Benefit from

(Provision for)

Income Taxes

Restructuring charges (Note 4)

$5

$5

Transaction-related items (Note 4)

Net discrete tax benefit

n/a

$4

n/a

$8

n/a - not applicable

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

For the three and six months ended June 30, 2025 (Predecessor), we recorded a provision for income taxes of

$50 million and $150 million, reflecting an effective income tax rate of 28.1% and 29.3%, 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 2.9 percentage points and 3.0

percentage points for their respective periods.

Impact from Items Affecting Comparability

Predecessor

Earnings (Loss)

Before Income

Taxes

Benefit from

(Provision for)

Income Taxes

Earnings (Loss)

Before Income

Taxes

Benefit from

(Provision for)

Income Taxes

Impairment charges (Note 15)

Restructuring charges (Note 4)

Transaction-related items (Note 4)

$(4)

$1

$1

Gain from dispositions

$—

$—

$(2)

Net discrete tax provision

n/a

$(2)

n/a

$(9)

n/a - not applicable

Equity in Loss of Investee Companies, Net of Tax

The following tables present equity in loss of investee companies for our equity-method investments.

Successor

Predecessor

Three Months

Ended June 30,

Three Months

Ended June 30,

Increase/(Decrease)

$

%

Equity in loss of investee companies

Tax provision

(2)

(3)

(1)

Equity in loss of investee companies,

net of tax

Successor

Predecessor

Six Months

Ended June 30,

Six Months

Ended June 30,

Increase/(Decrease)

$

%

Equity in loss of investee companies

Tax provision

(2)

(2)

—

—

Equity in loss of investee companies,

net of tax

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Net Earnings Attributable to Parent and Diluted EPS

Successor

Predecessor

Three Months

Ended June 30,

Three Months

Ended June 30,

Increase/(Decrease)

$

%

Net earnings attributable to Parent

Diluted EPS

Successor

Predecessor

Six Months

Ended June 30,

Six Months

Ended June 30,

Increase/(Decrease)

$

%

Net earnings attributable to Parent

$—

—%

Diluted EPS

For the three months ended June 30, 2026 (Successor), we reported net earnings attributable to Parent of $41

million, or $.04 per diluted share, compared with net earnings attributable to Parent of $57 million, or $.08 per

diluted share, for the three months ended June 30, 2025 (Predecessor). For the six months ended June 30, 2026

(Successor), we reported net earnings attributable to Parent of $209 million, or $.19 per diluted share, compared

with net earnings attributable to Parent of $209 million, or $.31 per diluted share, for the six months ended June 30,

2025 (Predecessor). For both the three- and six-month periods, the decrease in diluted EPS reflects shares issued in

connection with the Skydance Transactions and the NAI Transaction (see Note 10 to the consolidated financial

statements).

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

Segment Results of Operations

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 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 (together with the segment change, the “new segment presentation”). Certain centralized costs

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

The tables below set forth our financial information by reportable segment. 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, we are required to present

segment information for periods prior to August 7, 2025 based on our previous segments, Filmed Entertainment,

Direct-to-Consumer, and TV Media. In addition, in order to provide useful information for investors that is

consistent with the manner in which our management reviews our results, on the following pages we have provided

supplemental non-GAAP presentations reflecting the Predecessor amounts for the three and six months ended June

30, 2025 recast under the new segment presentation, as well as the related reconciliations from the GAAP

presentation.

GAAP

Non-GAAP (a)

Successor

Predecessor

Predecessor

Three Months Ended

Three Months Ended

Three Months Ended

Revenues:

Studios

Filmed Entertainment

Studios

Theatrical

Licensing and other

Advertising

4

2

4

Total

Direct-to-Consumer

Direct-to-Consumer (b)

Direct-to-Consumer

Advertising

Affiliate and subscription

Licensing

—

1

1

Total

TV Media

TV Media (b)

TV Media

Advertising

Affiliate and subscription

Licensing and other

Total

Eliminations

Eliminations

Eliminations

(3)

(4)

Total Revenues

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

GAAP

Non-GAAP (a)

Successor

Predecessor

Predecessor

Three Months

Ended June 30,

Three Months

Ended June 30,

Three Months

Ended June 30,

Adjusted EBITDA:

Adjusted OIBDA(c):

Adjusted EBITDA:

Studios

Filmed Entertainment

Studios

Direct-to-Consumer

Direct-to-Consumer (b)

Direct-to-Consumer

TV Media

TV Media (b)

TV Media

Corporate/

Eliminations (d)

Corporate/

Eliminations (d)

Corporate/

Eliminations (d)

Stock-based

compensation (e)

Stock-based

compensation (e)

Stock-based

compensation (e)

Depreciation and

amortization

Depreciation and

amortization

Depreciation and

amortization

Impairment charges

—

Impairment charges

Impairment charges

Restructuring and

transaction-related

items (e)

Restructuring and

transaction-related

items (e)

Restructuring and

transaction-related

items (e)

Operating income

Operating income

Operating income

Interest expense, net

Interest expense, net

Interest expense, net

Other items, net

Other items, net

Other items, net

Earnings before

income taxes and

equity in loss of

investee companies

Earnings before

income taxes and

equity in loss of

investee companies

Earnings before

income taxes and

equity in loss of

investee companies

Provision for income

taxes

Provision for income

taxes

Provision for income

taxes

Equity in loss of

investee companies,

net of tax

Equity in loss of

investee companies,

net of tax

Equity in loss of

investee companies,

net of tax

Net earnings (Parent

and noncontrolling

interests)

Net earnings (Parent

and noncontrolling

interests)

Net earnings (Parent

and noncontrolling

interests)

Net earnings

attributable to

noncontrolling

interests

—

Net earnings

attributable to

noncontrolling

interests

(4)

Net earnings

attributable to

noncontrolling

interests

(4)

Net earnings

attributable to Parent

Net earnings

attributable to Parent

Net earnings

attributable to Parent

(a) As discussed above, Adjusted EBITDA by segment recast under our new segment presentation is non-GAAP. See Studios, Direct-

to-Consumer, and TV Media on the following pages for reconciliations from the GAAP segment presentation for the three months

ended June 30, 2025 to the non-GAAP recast amounts. All other amounts in this table are presented on a GAAP basis.

(b) Reflects the historical segment composition for Direct-to-Consumer and TV Media.

(c) In the first quarter of 2026, we renamed our primary measure of profit and loss for our operating segments from Adjusted OIBDA to

Adjusted EBITDA. See Note 13 to the consolidated financial statements for further discussion.

(d) As noted above, 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, which resulted in higher costs at Corporate. The increase compared with the

non-GAAP Predecessor presentation was driven by higher technology costs and consulting fees.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

(e) The increase in stock-based compensation expense between the 2026 and 2025 periods was driven by grants following the Skydance

Transactions and the comparison to lower expenses in 2025 as a result of accelerated vesting in December 2024 of certain

employees’ RSUs and PSUs to help mitigate potential tax impacts that would otherwise arise under Sections 280G and 4999 of the

Internal Revenue Code. Stock-based compensation expense of $9 million for three months ended June 30, 2026 (Successor) and $4

million for the three months ended June 30, 2025 (Predecessor) is included in “Restructuring and transaction-related items.”

GAAP

Non-GAAP (a)

Successor

Predecessor

Predecessor

Six Months Ended June 30,

Six Months Ended June 30,

Six Months Ended June 30,

Revenues:

Studios

Filmed Entertainment

Studios

Theatrical

Licensing and other

Advertising

8

5

9

Total

Direct-to-Consumer

Direct-to-Consumer (b)

Direct-to-Consumer

Advertising

Affiliate and subscription

Licensing

—

1

1

Total

TV Media

TV Media (b)

TV Media

Advertising

Affiliate and subscription

Licensing and other

Total

Eliminations

Eliminations

Eliminations

(3)

(6)

Total Revenues

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

GAAP

Non-GAAP (a)

Successor

Predecessor

Predecessor

Six Months

Ended June 30,

Six Months

Ended June 30,

Six Months

Ended June 30,

Adjusted EBITDA:

Adjusted OIBDA(c):

Adjusted EBITDA:

Studios

Filmed Entertainment

Studios

Direct-to-Consumer

Direct-to-Consumer (b)

Direct-to-Consumer

TV Media

TV Media (b)

TV Media

Corporate/

Eliminations (d)

Corporate/

Eliminations (d)

Corporate/

Eliminations (d)

Stock-based

compensation (e)

Stock-based

compensation (e)

Stock-based

compensation (e)

Depreciation and

amortization

Depreciation and

amortization

Depreciation and

amortization

Impairment charges

—

Impairment charges

Impairment charges

Restructuring and

transaction-related

items (e)

Restructuring and

transaction-related

items (e)

Restructuring and

transaction-related

items (e)

Gain on dispositions

—

Gain on dispositions

Gain on dispositions

Operating income

Operating income

Operating income

Interest expense, net

Interest expense, net

Interest expense, net

Other items, net

Other items, net

Other items, net

Earnings before

income taxes and

equity in loss of

investee companies

Earnings before

income taxes and

equity in loss of

investee companies

Earnings before

income taxes and

equity in loss of

investee companies

Provision for income

taxes

Provision for income

taxes

Provision for income

taxes

Equity in loss of

investee companies,

net of tax

Equity in loss of

investee companies,

net of tax

Equity in loss of

investee companies,

net of tax

Net earnings (Parent

and noncontrolling

interests)

Net earnings (Parent

and noncontrolling

interests)

Net earnings (Parent

and noncontrolling

interests)

Net earnings

attributable to

noncontrolling

interests

(7)

Net earnings

attributable to

noncontrolling

interests

Net earnings

attributable to

noncontrolling

interests

Net earnings

attributable to Parent

Net earnings

attributable to Parent

Net earnings

attributable to Parent

(a) As discussed above, Adjusted EBITDA by segment recast under our new segment presentation is non-GAAP. See Studios, Direct-

to-Consumer, and TV Media on the following pages for reconciliations from the GAAP segment presentation for the six months

ended June 30, 2025 to the non-GAAP recast amounts. All other amounts in this table are presented on a GAAP basis.

(b) Reflects the historical segment composition for Direct-to-Consumer and TV Media.

(c) In the first quarter of 2026, we renamed our primary measure of profit and loss for our operating segments from Adjusted OIBDA to

Adjusted EBITDA. See Note 13 to the consolidated financial statements for further discussion.

(d) As noted above, 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, which resulted in higher costs at Corporate. The increase compared with the

non-GAAP Predecessor presentation was driven by higher technology costs and consulting fees.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition (Continued)

(Tabular dollars in millions, except per share amounts)

(e) The increase in stock-based compensation expense between the 2026 and 2025 periods was driven by grants following the Skydance

Transactions and the comparison to lower expenses in 2025 as a result of accelerated vesting in December 2024 of certain

employees’ RSUs and PSUs to help mitigate potential tax impacts that would otherwise arise under Sections 280G and 4999 of the

Internal Revenue Code. Stock-based compensation expense of $9 million for the six months ended June 30, 2026 (Successor) and

$4 million for the six months ended June 30, 2025 (Predecessor) is included in “Restructuring and transaction-related items.”

Studios/Filmed Entertainment

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.

GAAP