Hollywood unions and trade groups are pushing back against the proposed $82.7-billion deal for streaming giant Netflix to acquire Warner Bros.’ film and television studios, HBO and HBO Max, citing concerns about greater industry consolidation, job losses and the potential hit to theatrical box office revenue.
Groups began voicing opposition even before the proposed tie-up was officially announced. Amid reports Thursday night that Netflix had secured exclusive rights to negotiate with Warner Bros., the Directors Guild of America said it had “significant concerns” about the development and intended to meet with Netflix for further discussion.
“We believe that a vibrant, competitive industry — one that fosters creativity and encourages genuine competition for talent — is essential to safeguarding the careers and creative rights of directors and their teams,” the DGA said in a Thursday statement.
A major point of contention is Netflix’s long-standing resistance to traditional theatrical film releases. Though the Los Gatos, Calif., streamer has released films in theaters — including about 30 this year alone — it does so typically for marketing or awards purposes and limits the amount of time those movies are available on the big screen.
That theatrical window was once at least 80 days, but has varied by studio since the pandemic. Last year, the average length of time a film was in theaters was about 32 days, according to data from the Numbers, a movie business information site.
Netflix has not been shy about its main goal of offering subscribers first-run movies on its platform, which upends the traditional strategy of having films debut in theaters for an exclusive period before being available at home.
For Netflix, having films launch on its platform allows the company to attract new users, as well as keep existing customers engaged.
But that stance has led to a testy relationship between Netflix and some exhibitors, which have pushed in general for more films to be released on the big screen. The urgency of that effort has only increased in recent years, particularly as the movie theater business continues to recover from the pandemic and dual writers’ and actors’ strikes of 2023.
Theater owner trade group Cinema United has voiced staunch opposition to the deal, saying it represented an “unprecedented threat to the global exhibition business.”
The group urged regulators to take a close look at the proposed transaction, saying in a statement that annual box office revenue in the U.S. and Canada could decrease by 25% if films that typically get a theatrical release by Warner Bros. bypass the theaters and instead are sent directly to streaming.
“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,” Michael O’Leary, the group’s chief executive, said in a statement. “Netflix’s stated business model does not support theatrical exhibition. In fact, it is the opposite.”
To ease concerns about the effect on box office revenue, Netflix Co-Chief Executive Ted Sarandos told analysts in a call Friday that Warner Bros. films slated for theatrical release will still go to theaters, while Netflix films will follow the company’s existing release strategy. Future Warner Bros. films without existing exhibition commitments will also go to theaters, Netflix said.
But Netflix’s impact on Hollywood’s entire business model has been a point of contention for years, including how its streaming strategy upended existing compensation models for writers and the way shows were made — a key concern during the 2023 strike.
Hollywood unions and trade groups also noted the possibility of more job losses due to the consolidation. Already this year, Hollywood has seen scores of layoffs, some due to the recent merger between Paramount and Skydance Media.
“The world’s largest streaming company swallowing one of its biggest competitors is what antitrust laws were designed to prevent,” the Writers Guild of America West and Writers Guild of America East said in a statement calling for the deal to be blocked. “The outcome would eliminate jobs, push down wages, worsen conditions for all entertainment workers, raise prices for consumers, and reduce the volume and diversity of content for all viewers.”
The Screen Actors Guild-American Federation of Television and Radio Artists said it planned to analyze the details of the proposed deal with an eye toward jobs and production commitments.
“A deal that is in the interest of SAG-AFTRA members and all other workers in the entertainment industry must result in more creation and more production, not less,” the union said in a Friday statement.
While Netflix was once seen as simply a disrupter in the industry, it’s clear it could soon be the face of the new studio system, said former producer Travis Knox, an associate professor of creative producing at Chapman University’s Dodge College of Film and Media Arts.
“Every time a disruption hits — whether the introduction of television, the rise of cable, home video, the arrival of the internet — Hollywood always reacts like it’s an extinction-level event,” he said. “In five years, we’ll look back and realize this wasn’t the final nail in the coffin of the studio system. It was just a much-needed system update.”
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