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The trade association representing theater owners warned a congressional committee that the acquisition of Warner Bros. Discovery by either Netflix or Paramount will have a negative impact on their business.
Cinema United argued that the consolidation threatens to reduce the number of movies released theatrically and increase the leverage of studios in exhibition negotiations. The trade association outlined its concerns over consolidation in a statement to a House Judiciary antitrust subcommittee, which is holding a hearing on Wednesday on competition in digital streaming.
“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,” Cinema United said in its statement. “Such an acquisition will further consolidate control over 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.”
The group added, “If Paramount or another major studio ends up displacing Netflix as the buyer, our concerns are no less serious. A combination of Paramount and Warner Bros., for instance, would consolidate as much as 40% of each year’s domestic box office in the hands of a single dominant studio.”
Cinema United also argued that consolidation will reduce the diversity of movie options and will lead to job loss.
“The number of films being produced for theatrical exhibition is slowly returning to pre-2019 levels,” the group said. “However, that growth is threatened by further consolidation. At best, an acquisition of Warner Bros. will stall the growth we have seen in the last four years. More realistically, however, it will result in a significant reduction of theatrical releases.”
“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.”
On Wednesday, Warner Bros. Discovery announced that it was rejecting Paramount’s latest offer for its assets, as the WBD board stuck to an agreement to sell its studio and streaming assets to Netflix.
Netflix executives have said that they are committed to theatrical releases following the merger, but Cinema United said that “a true commitment requires both a robust slate of movies in theatres and a meaningful period of theatrical exclusivity supported by meaningful marketing, which is essential to maximizing the film’s success.” They cited the prospect of shorter theatrical windows, and pointed to figures showing that Disney reduced the number of wide releases after acquiring 20th Century Fox in 2019.
Cinema United has talked to executives at both Netflix and Paramount, but is looking for commitments more concrete than what has been said in statements or at conferences, said Michael O’Leary, the CEO of the trade association. That would include not just commitments to a consistent slate of theatrical releases supported by marketing, but “meaningful” windows as well, he said.
“The window situation is something that is key for us,” O’Leary said.
So far, nothing they have heard has moved them off their position that either transaction would be harmful to exhibition, he said.
The hearing — before the House Judiciary Subcommittee on the Administrative State, Regulatory Reform, and Antitrust — will feature witnesses John M. Yun, professor of law at George Mason University; Jessica Melugin, director of the Center for Technology & Innovation at the Competitive Enterprise Institute; and Jay Ezrielev, founder and managing principal, Elevecon.
English (US) ·