Industry backlash: Hollywood erupts in panic over merger

• In October, when Warner Bros. Discovery hung a “For Sale” sign on itself, Hollywood was sad. Megaproducer Larry Gordon likened the feeling to a death in the family. In group WhatsApp chats, screenwriters used words like “heartbreaking” and “tragic.”

Now that a sale has been announced — Netflix striking an $83 billion deal for the Warner Bros. studio and its sibling streaming service, HBO Max — a different emotion is coursing through the entertainment capital: Hollywood is mad.

Jane Fonda raged against the deal in a letter to an entertainment trade publication, calling the end of a stand-alone Warner Bros. “an alarming escalation in a consolidation crisis that threatens the entire entertainment industry, the public it serves and — potentially — the First Amendment itself.”

Michael O’Leary, CEO of Cinema United, a trade group representing 30,000 US movie screens, labelled the acquisition “an unprecedented threat” and vowed opposition. “Theatres will close, communities will suffer, jobs will be lost,” he warned, noting Netflix’s practice of giving films only “token” theatrical releases. Shares in major chains, including AMC, IMAX and Cinemark, fell as much as 8% Friday.

“This merger must be blocked,” the Writers Guild of America said, arguing that “the world’s largest streaming company swallowing one of its biggest competitors is what antitrust laws were designed to prevent.” The Teamsters’ motion picture division likewise demanded that “all levels” of government “reject this deal.”

Netflix insisted it would honour the Warner Bros. business model, continuing to give movies exclusive theatrical runs. “It’s not like we have this opposition to movies into theatres,” Ted Sarandos, Netflix’s co-CEO, told investors. “Right now, you should count on everything that is planned to go to the theatre through Warner Bros. to continue to go to theatres.”

But in Hollywood, his assurances met with skepticism. (“Key words: ‘right now,’” one agent sniffed.) Sarandos had said only in April that declining box office receipts reflected consumer preference: “They’d like to watch movies at home.” He also described theatres as “an outmoded idea” for most people.

The reaction was especially sharp because entertainment workers — camera operators, producers, hairstylists, writers, actors, set designers, editors — have already endured a contracting job market. The pandemic, two major strikes, production flight to cheaper locales and the rise of artificial intelligence tools have collectively resulted in tens of thousands of layoffs since 2020.

So on Friday, there was a keen understanding that “consolidation” often translates to “job loss.” It happened in 2019 when Disney bought 21st Century Fox for $71.3 billion. It happened again this year when Skydance Media, led by David Ellison, took over Paramount in an $8 billion merger. In October, Paramount began laying off more than 2,000 workers to cut $3 billion in costs.

Rep. Laura Friedman, a Democrat whose Burbank district includes major film institutions, warned that “repeated consolidation in this industry has already cost so many film and television jobs,” adding that any merger must be assessed for its effects on competition and employment. “I’ll be watching this deal closely to make sure it supports workers in LA.”

In Los Angeles — where the political establishment is overwhelmingly Democratic and pro-labour — leaders responded cautiously. Mayor Karen Bass praised the city’s production ecosystem and said LA would continue to “boost local production and create more jobs and small-business opportunities right here at home.”

Austin Beutner, a longtime civic leader challenging Bass for reelection, was blunter: “I’m concerned about the impact further consolidation will have on jobs in our community.”

Privately, City Hall was less restrained. Some expressed relief that David Ellison and his father, Larry — a vocal Trump supporter — would not be taking control of yet another iconic Southern California studio; the Ellisons had competed against Netflix for Warner Bros. and HBO Max. (They also sought to buy CNN, which will remain in a separate corporate entity.)

But the sale must clear federal regulatory review, and the Trump administration will likely influence any consideration. A senior aide to one City Council member, granted anonymity, noted that Netflix employs many Angelenos, but the FCC would have to approve the deal — and the looming question was what Netflix might have to do to appease Trump.

The New York Times