The Movie Theater Chains Joined Forces To Call Out Netflix And Demand Answers

The industry-shaking deal between Netflix and Warner Bros hasn’t been approved yet, but both parties are putting in the groundwork to make it more likely. Executives from the two companies appeared this week in front of Congress to answer questions from Senators. Members of both parties seemed skeptical of how a deal would benefit either the artistic community or consumers. Not surprisingly, the movie theater industry feels the same way.

In response to the proceedings and the testimony of Netflix co-CEO Ted Sarandos, Michael O’Leary wrote an op-ed for Variety, in which he demanded answers from Netflix about the long-term strategy if it successfully purchases Warner Bros. O’Leary’s words carry a ton of weight because he’s the President and CEO of Cinema United.

For those of you outside the industry, that’s the trade organization that represents exhibitors. The CEOs of AMC, Regal, Cinemark and many of the mid-sized theater chains all sit on the Board Of Directors he represents. So, if he’s speaking in an official capacity, he’s almost certainly speaking with the approval of all the biggest exhibitors. He wants answers, which means they want answers.

During his testimony, Sarandos reiterated his promise that Warner Bros will continue releasing movies into theaters and went further by saying it will honor a forty-five day exclusivity window where the films are kept off any streaming services. That was no doubt reassuring to many in the industry, given how critical Netflix has been about the window and even theatrical releases in general, but according to O’Leary, Sarandos needs to go further with his words.

He says the industry wants to know how many films Netflix plans to release into theaters under the Warner Bros label each year and whether the theatrical window will end with a period where consumers can buy or rent the movie or whether the films will immediately go to streaming services. He also wants to know if Netflix is planning to put marketing budgets behind the movies. Here’s a small portion of his much longer editorial…

The truth is none of us know what the future is going to look like in an entertainment space that’s further consolidated. Netflix’s case to government regulators is that its biggest competitor is YouTube, not the other streaming services. Sarandos and other executives are being clear that they’re planning to continue operating Warner Bros as a traditional movie studio that partners with the exhibitors. That’s why they’re being so loud about committing to a theatrical window.

Those words have not done enough to reassure the theater industry though, as this editorial makes clear. They still have questions, and O'Leary was specific they're less about Netflix and more about what it means for any company to buy one of the major studios.

Many politicians have already weighed in on Netflix’s prospective purchase of Warner Bros, and it’s likely many more will have their say in the coming weeks. There’s clearly a lot of skepticism coming from both inside and outside the industry, but whether that actually makes a difference for the chances this deal goes through is unclear. In the meantime, it’ll be interesting to see whether Netflix makes any further promises to appease the theater chains and other power players in Hollywood also concerned or whether they’ve budged as far as they’re going to budge.