Justice Department Looks Into Warner Bros. Discovery Sale’s Impact on Film Releases
The Justice Department is currently examining how the sale of Warner Bros. Discovery (WBD) might affect audiences and potentially reduce the number of new films hitting theaters. This investigation comes as Netflix is moving forward with its proposal after WBD reopened discussions with competitor Paramount Skydance.
As part of this process, federal antitrust attorneys are meeting privately with some of the largest movie theater chains in the country, though exact details about which companies are involved have not been disclosed.
Neither the Justice Department nor Warner Bros. has commented on this matter as of yet.
The potential merger of Netflix and HBO Max has raised monopoly concerns in the streaming industry, particularly since Netflix agreed in December to acquire WBD Studios and HBO Max for a staggering $72 billion.
However, theater chains and industry representatives are cautioning that this merger could jeopardize Hollywood’s landscape, especially considering Netflix’s trend of seldom releasing original films in theaters.
Recently, Warner Bros. re-engaged in negotiations with Paramount Skydance after the latter made an appealing offer for all of WBD, including its cable segments.
Even if Paramount manages to outbid Netflix, worries about the film industry could persist. Reports suggest that such a sale could plunge Paramount into significant debt, potentially limiting its ability to produce new films.
In a letter dated February 11 to U.S. Senator Cory Booker, signed by Paramount CEO David Ellison, the company argued that its offer is competitive, contending that a sale to Netflix would “not promote competition, but rather eliminate it.”
Filmmaker James Cameron, recognized for directing Paramount’s Titanic, also expressed his concerns, labeling the Netflix deal as a “disaster” for movie theaters.
In response, Netflix dismissed Paramount’s actions as “antics” and called its offer a “continued distraction” for WBD shareholders.
The streaming giant stated, “Netflix and Warner Bros. continue to provide greater choice and value to viewers worldwide by enhancing access to great movies and series, both at home and in theaters.”
They argue that if Paramount spends so heavily on Warner Bros., it might not have the resources needed to finance many new film releases.
Last year, Netflix CEO Ted Sarandos, who previously criticized moviegoing as an “outdated concept,” attempted to ease industry worries by promising that all films from WBD would see a limited theatrical release of 45 days.
Additionally, he met with executives from movie theater chains in Los Angeles last week, according to reports.
Cinema United, an industry group that includes chains like AMC Entertainment Holdings and Regal Cineworld Group, warned that the Netflix partnership could have “culturally devastating” effects, adding that the potential Paramount merger could be equally concerning.
On a recent conference call hosted by the Global Cinema Federation, some executives advocated for a Paramount deal due to its extensive history of releasing films. Cinemark Holdings CEO Sean Gamble expressed some unease regarding Netflix’s commitment to theatrical releases, emphasizing a desire for more reliable assurances over time.
While WBD announced its intention to continue negotiations with Paramount, it also voiced ongoing support for the agreement with Netflix.
However, there are growing sentiments within Paramount that WBD may eventually reconsider its deal with Netflix due to potential regulatory challenges.
In the meantime, activist investor Ancora Holdings, which holds a nearly $200 million stake in Warner Bros., is planning to oppose the Netflix deal, arguing that the board hasn’t engaged with Paramount adequately.
