WBD Credit: House of the Drag(on) — Streaming Leads, Studios Lag: Streaming Leads, Studios Lag

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M

Update

August 6, 2026 05:03 PM GMT

TMT Credit Research | North America

Morgan Stanley & Co. LLC

David M Hamburger

Credit Analyst

WBD Credit: House of the

Drag(on) — Streaming Leads,

Studios Lag

Key Takeaways

Juliana Gonzalez

Credit Analyst

See our prior notes:

- PSKY Credit: Sequel Pushed to 2027 (5 Aug

2026)

- PSKY/WBD Credit: Game of Liens – Closing

PARA Front-End Buy Recommendation (26 May

UK CMA formally cleared the PSKY/WBD deal Aug. 6; closing remains on hold

2026)

until 5 days after US state AG litigation concludes or June 1, 2027, whichever is

- WBD Credit: EBITDA Euphoria, FCF The Pitt (7

first.

May 2026)

Net lev flat QoQ at 3.4x. Repaid $15bn bridge w. $13bn TL B & €1.7bn TL B

- PSKY Credit: Capital Structure Still in

(~150bps annual interest savings); $4bn RCF undrawn; receivables program up

Production (5 May 2026)

$50mn QoQ to $3.9bn drawn.

- PSKY/WBD Credit: A High-Yield Script with

Revenue, Adj EBITDA fell short of our expectations; Streaming continues to

outperform/accelerate, Studios weakness from underperforming titles and timing

issues with a stronger '27 slate ahead, and Global Linear Networks is managing

NBA-driven declines w. cost discipline.

Investment-Grade Aspirations (20 Mar 2026)

- WBD/PSKY Credit: Bonds in a 'Sub-Liminal'

State (6 Mar 2026)

- WBD/PSKY Credit: Leverage Is Paramount (27

Feb 2026)

2Q FCF was $572mn vs $702mn last year, due to higher net content investment

- WBD/PSKY Credit: One Battle After Another

and after absorbing $350mn of PSKY transaction-related costs.

(26 Feb 2026)

Cons. ad rev -22% y/y, GLN ad rev -27% y/y, largely reflecting the NBA absence;

- WBD/PSKY Credit: Back to the (Sky)Dance

GLN opex -23% y/y. 40% of HBO Max subs on the ad-supported tier (+11% y/y).

Floor (13 Feb 2026)

Intl linear ad pressured by macro caution, World Cup-related ad displacement.

- WBD/PSKY Credit: The Sky's the Limit? (12 Dec

Mgmt. reiterated HSD full-year GLN opex improvement and Streaming’s long-

2025)

term 20%+ EBITDA-margin target.

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