In this articleWBDNFLXFollow your favorite stocksCREATE FREE ACCOUNTA man walks past movie posters at at AMC Theater in Montebello, California on May 5, 2025. Frederic J. Brown | AFP | Getty ImagesMovie theater operators woke up Friday to the possibility of a new world order.Netflix and Warner Bros. Discovery announced a deal for the streaming giant to acquire WBD’s film studio and streaming service, bringing an end to a months-long bidding process that saw Paramount Skydance and Comcast also vying for the assets.With Netflix as the victor, exhibitors are in a panic. Unlike traditional movie studios, the streamer has not adhered to conventional theatrical distribution, and there are fears that big changes could be coming to an industry that is still struggling post-pandemic.”It’s no secret that this was probably the least desired outcome for many theater owners,” said Shawn Robbins, director of analytics at Fandango and founder of Box Office Theory. “There are no two ways around that. This may be one of the most meaningful days in the history of the business, but it could yet be a constructive one for cinema if Netflix honors early indications that it will maintain the theatrical business model of Warner Bros. properties and lean into those unique strengths which are not replicable on the streaming platform.”Cinema United, the world’s largest exhibition trade association, came out strong Friday morning against the sale of WBD assets to Netflix.”The proposed acquisition of Warner Bros. by Netflix poses an unprecedented threat to the global exhibition business,” CEO Michael O’Leary said in a statement. “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.”A half dozen movie theater operators who spoke to CNBC shared concerns that Netflix’s acquisition of WBD would lead to a significant decline in the number of films made available to cinemas annually and, therefore, hit annual box office ticket sales.”Netflix’s stated business model does not support theatrical exhibition. In fact, it is the opposite,” O’Leary said. Cinema United said the deal “would risk removing 25% of the annual domestic box office” putting smaller theater chains and independent cinemas, in particular, at risk.”We are going to be pulling all of the levers we can because we think that a deal of this magnitude and the potential impact that it will have is something that everyone with regulatory and oversight authority needs to look closely at,” O’Leary said on CNBC’s “Squawk on the Street” Friday. “So, we’ve already been talking to people at the federal level, at the state level and internationally because this is a significant, significant threat, we believe, to the long-term viability of the theatrical exhibition.”And Cinema United isn’t the only group worried about the future of the industry if the Netflix deal is approved.A collective of top industry players sent an open letter to Congress detailing the potential economic and institutional blowback that could play out if the merger goes through.The letter, reported by Variety, stated that Netflix would “effectively hold a noose around the theatrical marketplace” and could alter the footprint of theatrical movies and decrease licensing fees paid in post-theatrical windows.An uncertain futureSeveral exhibitors told CNBC that they fear a deal between WBD and Netflix will result in fewer theatrical releases and even shorter theatrical windows for would-be major releases.Consolidation in the studio space has been a growing issue for the theatrical industry in recent years. When studios merge, they typically decrease the number of films they produce, something the industry saw firsthand when Disney bought 20th Century Fox back in 2019.The theatrical business has struggled in recent years from pandemic related production shutdowns as well as dual labor strikes that halted film shoots and delayed movie releases. The indust …
