Netflix just solidified itself as the leading entertainment company (and then some), and all it cost was $83 billion.
The East coast is just waking up to the bombshell news that Netflix is buying Warner Bros. (but not Discovery — the split and spin is still on). That’s kind of weird, as Warner Bros. is famously a legacy film studio. How legacy is it? WB literally predates the advent of television, which Netflix basically upended when it switched from DVDs to streaming video. (Or at least, when it launched Lilyhammer, House of Cards and Orange Is the New Black.)
In his acquisition announcement, Ted Sarandos, Netflix’s co-CEO and former chief content officer, first shouted out (in order) Casablanca, Citizen Kane and Harry Potter — three very theatrically released. Netflix famously does not distribute its movies in theaters, with (very) few, (very) limited exceptions.
“Our mission has always been to entertain the world,” Sarandos said in a statement. “By combining Warner Bros.’ incredible library of shows and movies — from timeless classics like Casablanca and Citizen Kane to modern favorites like Harry Potter and Friends — with our culture-defining titles like Stranger Things, KPop Demon Hunters and Squid Game, we’ll be able to do that even better. Together, we can give audiences more of what they love and help define the next century of storytelling.”
The press release affirms Netflix is committed to releasing Warner Bros. films theatrically — sort of.
“Warner Bros.’ studios are world-class, with Warner Bros. recognized as a leading supplier of television titles and filmed entertainment. HBO and HBO Max also provide a compelling, complementary offering for consumers,” the media alert reads. “Netflix expects to maintain Warner Bros.’ current operations and build on its strengths, including theatrical releases for films.”
That’s kind of a heavy “expects.”
Paramount Skydance, the company that did not win the bidding war for Warner Bros., is feeling all sorts of feels this morning. In a letter sent Monday from Paramount’s attorneys to Warner Bros. Discovery’s lawyers, the counsel for the losing party repeatedly stated how bad Netflix Warner Bros. would be for the movie industry.
“Netflix does not have the same incentive to release films in theaters and will be incentivized to use WBD’s world-class IP library to entrench Netflix’s streaming dominance while also harming theatrical distribution, talent and moviegoers,” it reads. There’s a lot of that.
Like: “Netflix, if combined with WBD, will reduce the number of films for broad theatrical release, further pushing consumers away from theaters to streaming and harming those theaters which are already struggling. Given that the co-CEO of Netflix has called brick-and-mortar movie theaters an ‘outdated; concept, Netflix ownership of WBD’s studio would continue the trend toward more empty seats in theaters as Netflix shifts its movies away from initial runs in theaters.”
And: “Netflix’s streaming ambitions that threaten consumers, creative talent, and theatrical distribution.”
You get the point. As does Cinema United, the former NATO (National Association of Theatre Owners).
“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 theatres 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 reacting to Friday’s news. “Cinema United stands ready to support industry changes that lead to increased movie production and give consumers more opportunities to enjoy a day at the local theatre. But Netflix’s stated business model does not support theatrical exhibition. In fact, it is the opposite. 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.”
O’Leary & Co. believe the deal specifically risks “removing 25 percent of the annual domestic box office.”
“Netflix success is television, not movies on the big screen. A true commitment to exhibition means a robust slate of movies with a meaningful period of theatrical exclusivity supported by marketing. Sporadic and truncated theatrical releases to meet awards criteria in a handful of theatres is not a commitment to exhibition,” O’Leary added. “Movie theatres are cultural and economic anchors of communities of all sizes—we are a Main Street industry. Research shows that for each dollar spent in a local movie theatre, an additional $1.50 is spent in surrounding businesses in the community—restaurants, bars, shopping centers, transportation. That is what is at risk here if we sanction fewer movies in the marketplace. Theatres will close, communities will suffer, jobs will be lost.”