Warner Bros. Merger Concerns Intensify Among Movie Theaters
The landscape of the film industry is witnessing significant upheaval, particularly due to potential mergers. Recently, concerns about the merger of Warner Bros. with Netflix have intensified among movie theaters and industry professionals.
Warner Bros. and the Netflix Acquisition Bid
Netflix co-CEO Ted Sarandos addressed theater owners on Monday, amidst a $108.4 billion hostile acquisition attempt by David Ellison and his father, Larry Ellison. This bid threatens Netflix’s own $82.7 billion deal to acquire Warner Bros., a key player in Hollywood.
During an investor conference in New York City, Sarandos affirmed that Warner Bros. will continue its theatrical releases. He emphasized that the company is committed to maintaining the value of theatrical distribution, stating, “We didn’t buy this company to destroy that value.” This approach comes at a time when the industry is grappling with declining box office numbers.
Impact on Movie Theaters
Industry experts are increasingly concerned. They report a significant drop in the volume of movies released, particularly following the COVID-19 pandemic. The situation mirrors the effects seen in 2019 when domestic box office revenue neared $11 billion; in recent years, it has struggled to reach $9 billion, with projections of just $8.8 billion for the current year.
- Domestic box office revenue has dropped by over 20% since the pandemic.
- The current year’s revenue is expected to closely match last year’s figures.
- Experts estimate 15-20% of regular moviegoers have not returned.
Mike Bowers, chair of Cinema United’s executive board, warned that further consolidation poses an existential threat to cinemas. He cited that a sustained drop in the number of films could lead to a “crumbling” of the entire theatrical ecosystem. Such mergers might not only affect large theaters but also independent cinemas.
Theatrical Landscape Shifting
Sarandos has a complex history with theater operators and has often prioritized Netflix subscribers over traditional theatrical experiences. Despite this, Netflix has been willing to grant limited theatrical runs for specific titles. For example, “The Irishman” received a four-week exclusive window in theaters.
The potential acquisition by Netflix has triggered reactions from theater owners. Michael O’Leary, CEO of Cinema United, urged regulators to examine the transaction’s implications. He highlighted that Netflix’s business model is typically at odds with the needs of theatrical exhibition.
Future Movie Releases
- Ellison has promised that if his bid succeeds, studios at Paramount and Warner Bros. would release over 30 films per year.
- This contrasts sharply with current trends that show productions declining.
Observational data from previous mergers reveals that consolidations, even among legacy studios, often lead to fewer films being produced for theaters. For instance, Disney and 20th Century Fox combined released 26 titles in more than 2,000 domestic theaters in 2016. In contrast, this year’s total from the combined entity is merely 14, marking a staggering 46% decline.
As this acquisition process unfolds, the film industry remains on edge. The commitment of Netflix to theatrical releases and the level of marketing support for Warner Bros. films will greatly influence the future viability of cinemas around the globe.
