Theatre Owners Group Urges Senate Scrutiny of Possible Netflix–Warner Bros. Deal

In written testimony delivered Tuesday, Cinema United said the acquisition would be damaging on both economic and cultural levels. The organization warned, “If Netflix succeeds in acquiring Warner Bros., the results will be economically and culturally catastrophic: fewer theatres, shorter windows, less revenue, fewer jobs across the national and global entertainment industry, and fewer movies for consumers to see in theatres.” Per Deadline, the testimony spans six pages and represents the organization’s most detailed argument yet against the proposed transaction.

Cinema United, which was formerly known as the National Association of Theatre Owners, took particular issue with how films might be released theatrically under Netflix ownership. While Netflix co-CEO Ted Sarandos has told lawmakers that the company supports a roughly 45-day exclusive theatrical window for its movies, rival studio sources remain skeptical,  according to Deadline. Industry executives note that a 45-day window traditionally refers to the period before a film moves to premium video-on-demand or digital sales, not to streaming. Streaming releases, by contrast, typically occur 90 to 100 days or more after a theatrical debut.

The organization emphasized that its concerns extend beyond release windows to broader market power. In its statement, Cinema United said, “We are deeply concerned that this acquisition of Warner Bros. by Netflix will have a direct and irreversible negative impact on movie theatres around the world. Such an acquisition will further consolidate control over the production and distribution of motion pictures in the hands of a single, dominant, global streaming platform in a market that is already highly concentrated. The impact will not only be felt by theatre owners, but by movie fans and surrounding businesses in communities of all sizes.”

Related: Senators Grill Netflix CEO Over Warner Bros. Deal as Antitrust Fears Mount

According to Deadline, Cinema United also cautioned lawmakers that the risks would remain even if Netflix were not the ultimate buyer. The group said that a merger involving another major studio would raise similar red flags, noting that a combination of Paramount and Warner Bros. could place as much as 40% of the domestic box office under the control of one company.

The testimony further argues that consolidation threatens the fragile recovery of theatrical production following the pandemic years. “The key to a successful industry overall is having a diverse, robust, and consistent product pipeline that responds to consumer demand,” the Michael O’Leary–led organization stated. While the number of films produced for theatres is gradually returning to pre-2019 levels, Cinema United warned that additional consolidation could halt or reverse that progress.

The group concluded by urging regulators to consider historical precedent. “We must heed the lessons of the past: further industry consolidation has consistently led to fewer movies being made, and there is no reason whatsoever to believe the outcome here would be any different, particularly given Netflix’s stated views of movie theatres over the past decade-plus,” the statement said, per Deadline.

Cinema United represents more than 31,000 movie screens across all 50 U.S. states, as well as over 30,000 additional screens in more than 80 countries worldwide, giving the organization a significant voice in the ongoing antitrust debate.

Source: DeadLine