Cinema United, formerly the National Association of Theater Owners, has warned of a coming collapse if the Netflix-Warner Bros. merger deal finalizes.
The organization shared in a statement to the Senate antitrust subcommittee that the deal will lead to the shuttering of movie theaters and further job losses.
“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,” said the six-page statement shared to the Senate Judiciary Subcommittee on Antitrust, Competition Policy & Consumer Rights.
The statement further warned that the deal would allow for Netflix to consolidate industry control over production.
“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,” it said.
“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,” it continued. “The impact will not only be felt by theatre owners, but by movie fans and surrounding businesses in communities of all sizes.”
The statement even went beyond Netflix and even warned that a Paramount takeover of Warner Bros. could lead to a similar outcome.
“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,” it said.
“The key to a successful industry overall is having a diverse, robust, and consistent product pipeline that responds to consumer demand,” it continued. “The number of films being produced for theatrical exhibition is slowly returning to pre-2019 levels. 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.”
Cinema United noted that past industry consolidation led to similar issues.
“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,” it said.
Netflix co-CEO Ted Sarandos testified on Capitol Hill this week where he defended his company’s $83 billion merger deal with Warner Bros. as a means to compete with “deep-pocketed tech companies” out to run the entertainment business.
In his opening remarks, Sarandos said that the Netflix-Warner Bros. deal “will strengthen the American entertainment industry, preserve choice and value for consumers, and give creators more opportunities,” asserting that the company created 155,000 jobs across all 50 states while contributing “over $225 billion to the U.S. economy over the last 10 years,” per Variety.
Sarandos also said that Netflix would respect Warner Bros. integrity and allow the studio to operate “largely as they are today,” adding that the studio has assets Netflix does not have. By combining both the Netflix library and the HBO Max library, Sarandos said that the company would be offering customers more for less, claiming that 80 percent of HBO Max subscribers currently subscribe to Netflix.
“He also said Netflix faces increasing competition from ‘deep-pocketed tech companies trying to run away with the TV business,’ naming Google’s YouTube, Apple and Amazon’s Prime Video,” continued Variety. “He noted that Netflix’s share of U.S. TV viewership for December was 9% and that with HBO Max will be around 10%, still behind YouTube’s share of TV viewing.”
“Among premium streaming services, according to Sarandos, Netflix has about 18% share in the U.S. while HBO Max has about 3%, meaning the combination would hold about 21%,” it added.
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