The US Justice Department has begun reaching out to several of the nation’s largest theater chains for private discussions about the possible sale of Warner Bros. Discovery Inc., according to Bloomberg. The outreach signals growing regulatory interest in how a change in ownership could reshape both theatrical film releases and the broader entertainment landscape.
Antitrust officials are seeking insight into how moviegoers might be affected if the studio changes hands, including whether fewer films would ultimately make it to theaters, according to Bloomberg. The conversations are part of a broader review process aimed at understanding competitive impacts, particularly as streaming platforms continue to gain influence in the film industry.
While much of the government’s scrutiny is expected to center on Netflix Inc.’s dominance in streaming, concerns have also emerged over how Warner Bros. films would be distributed theatrically under new ownership, per Bloomberg. Netflix has traditionally released only a limited number of movies in select theaters for brief runs, a strategy that has unsettled theater operators who rely on longer exclusive windows.
Warner Bros. has agreed to sell its studio and HBO Max streaming business to Netflix. However, earlier this week the company said it would reopen discussions with Paramount Skydance Corp. regarding a potential acquisition. Paramount has maintained that its proposal represents a stronger outcome for consumers and has pledged to increase film production if it succeeds in acquiring Warner Bros., according to Bloomberg.
Industry voices have weighed in on the debate. In November, filmmaker James Cameron publicly endorsed Paramount’s bid and warned that a sale to Netflix would be “a disaster” for the cinema industry. In a Feb. 11 letter to US Senator Cory Booker, Paramount Chief Executive Officer David Ellison wrote that a Netflix acquisition of Warner Bros. “would not advance competition, but rather extinguish it.”
Read more: Warner Bros Discovery Gives Paramount One Week to Improve $30-Per-Share Bid as Netflix Deal Advances
Netflix executives have sought to counter those concerns. Co-CEO Ted Sarandos has promised that Warner Bros. films would receive an exclusive 45-day theatrical release before moving to streaming. He has also argued that a Paramount acquisition could hinder production due to the significant debt load Paramount would carry if it wins the bidding, according to Bloomberg.
Sarandos met with several cinema chain chief executives in Los Angeles last week in an effort to ease resistance to the Netflix deal, according to Bloomberg. The company also issued a statement Tuesday asserting that a Paramount-Warner Bros. merger would combine two of the five largest Hollywood studios and their distribution operations.
“Netflix and Warner Bros. will deliver more choice and greater value to audiences worldwide with expanded access to exceptional films and series – both at home and in theaters,” the company said.
The industry’s trade group, Cinema United, which represents major chains including AMC Entertainment Holdings Inc. and Regal Cineworld Group, has taken a cautious stance. The group has described a Netflix acquisition of Warner Bros. as “culturally catastrophic,” while also warning that a deal with Paramount would be “no less serious,” according to Bloomberg. With a sale to one of the bidders appearing increasingly likely, many theater executives now believe they must decide which suitor better aligns with their long-term interests.
During a recent private call organized by the Global Cinema Federation, an international organization representing 12 of the world’s largest theater chains and trade associations, some chief executives voiced support for Paramount’s bid, according to Bloomberg. Their reasoning centered on Paramount’s longstanding ties to theaters and Ellison’s public commitment to release a combined 30 films annually in cinemas from Paramount and Warner Bros. if the acquisition proceeds.
Tensions remain high among exhibitors. As recently as last April, Sarandos described the traditional movie theater model as “an outdated concept.” That remark continues to weigh on industry leaders. Sean Gamble, CEO of Cinemark Holdings Inc., said on a conference call with investors Wednesday that he remains “a bit apprehensive” about Netflix’s pledge to honor a 45-day theatrical window.
“I think we’re all looking for much firmer assurances that are longstanding for not only a window, but levels of continued investment and also sustained marketing, which is a critical component of this, too, versus just verbal comments and promises,” Gamble said.
Source: Bloomberg
