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Depending on your perspective, Netflix’s $83 billion deal to buy Warner Bros. Discovery’s studio and streaming businesses can be understood as either the sum of all Hollywood fears, an unexpected boon to film lovers everywhere, or the ultimate case of dog catching car. In the view of the movie theater industry trade association Cinema United, the deal — which is still pending regulatory approval and would not go into effect until Q3 next year — represents a death blow to multiplexes. “The proposed acquisition of Warner Bros. by Netflix poses an unprecedented threat to the global exhibition business. The negative impact of this acquisition will impact theaters from the biggest circuits to one-screen independents in small towns in the United States and around the world,” Cinema United president and CEO Michael O’Leary said in a statement Friday. “Regulators must look closely at the specifics of this proposed transaction and understand the negative impact it will have on consumers, exhibition and the entertainment industry.”
Top industry players sent an anonymous open letter to Congress Thursday warning against a Netflix-WBD merger before the deal was announced, with Netflix co-CEO Ted Sarandos’s oft-repeated 2023 earnings call remark front of mind: “Driving folks to a theater is just not our business.” In the letter, the group of “concerned” feature film producers say Netflix could “destroy” the theatrical film marketplace by accelerating the amount of time Netflix-Warner Bros. movies are shown in theaters to as little as two weeks before jumping to a Netflix-HBO Max streaming platform — or eliminating the theatrical window altogether. The gargantuan scale of the new studio-streaming conglomerate “would effectively hold a noose around the theatrical marketplace” by both limiting the number of new movies put into production and forcing down licensing fees paid during post-theatrical windowing. And those affronts to standard Hollywood operating procedure threaten millions of jobs across the industry.
Sarandos, for his part, attempted to assuage the creative and exhibition communities’ fears during an investors call explaining terms of the deal early Friday morning. Promising to continue theatrically releasing Warner Bros. films — adding to the studio’s content spend on top of Netflix’s existing $16 billion budget for series and movies — he acknowledged the duration of time that Net-Warn/Bros-flix movies will spend in theaters is set to shrink. “Over time, I think the windows will evolve to be much more consumer friendly, to be able to meet the audience where they are quicker,” Sarandos said. “I’d say right now, you should count on everything that is planned on going to the theater through Warner Bros. [continuing] to go to the theater through Warner Bros. And Netflix movies will take the same strides they have. Some of them do have a short run in the theater beforehand. But our primary goal is to bring first-run movies to our members because that is what they are looking for.”
To be sure, Netflix has done more than any other single media entity to break movie lovers of their theater-going habit by offering mega budget titles by name-brand filmmakers at home for the price of a subscription. That perceived antipathy to theatrical distribution dates back to former Netflix CEO Reed Hastings famously accusing theaters of “strangling the movie business.” But the optics of Netflix buying Warner Bros. only to turn around and send all its theatrically earmarked movies straight to streaming would be beyond terrible. Coming just a half-decade removed from then-WarnerMedia chief executive Jason Kilar’s disastrous pandemic-era decision to release all of Warner Bros.’ 2021 slate in theaters and on streaming at the same time, such a move would effectively seal Netflix-Warners off to top-tier filmmakers. Renowned since the ‘60s as the most talent-friendly studio and backlot home to such venerated directors as Clint Eastwood, Terrence Malick and Stanley Kubrick, WB became toxic to Hollywood’s reigning heavyweight filmmakers Christopher Nolan (who released his Dark Knight trilogy of Batman movies through the studio) and Denis Villeneuve (Dune Parts I and 2) on the heels of Kilar’s hybrid-model debacle. And it had just begun to reputationally dig out this year under the leadership of Pamela Abdy and Michael DeLuca, co-chairs/co-CEOs of WB’s motion picture group. Filmmakers like Ryan Coogler and Paul Thomas Anderson both released films through the studio this year (Coogler: Sinners, Anderson: One Battle After Another), topping the box office during their opening weekends and becoming major Oscars contenders.
With ink on the Netflix-Warner Bros. deal not yet dry, Hollywood’s wait-and-see attitude towards the new and improved Service’s theatrical-release game plan was fairly encapsulated by the Producers Guild of America which described itself as “rightfully concerned” about the acquisition in a statement Friday morning. “Our legacy studios are more than just content libraries — within their vaults are the character and culture of our nation,” the PGA said.
Roy Lee is a prolific producer behind such hits as the IT and Lego Movie franchises who released the ecstatically reviewed horror smash Weapons and $958 million-dollar-grossing blockbuster A Minecraft Movie through Warner Bros. this year. As he sees it, conventional industry wisdom that a Netflix-WB merger will be overwhelmingly unhealthy for Hollywood is too simplistic. “I don’t believe that just because one studio is absorbed by Netflix, it’s going to totally shut down the business,” Lee says. “There’s all this talk of doom and gloom — Hollywood is a business. There’s always a balance. Somebody will step in to fill the gap. Ellison has said he’ll step up and make more movies. If Warner Bros. isn’t making movies for theatrical, some other studio will make more.”
Lee theorizes that for the deal to receive governmental approval, Netflix will make concessions to the FCC promising not to raise prices and to continue releasing Warner Bros. movies theatrically for at least two more years. After that, however, Netflix could flip the script. “They’ll let Zaslav, Pam and Mike run it the way they want to run it until things go south,” Lee says. “And that’s when they’re going to put the hammer down on theatrical.”
