Whether it is Paramount, Netflix or Comcast, Warner Bros.’ prospective acquisition by another major Hollywood studio represents a “red alert” crisis for already-struggling movie theaters that could lead to antitrust legal action or protest from global exhibitors who would suffer from fewer movies in theaters, they told TheWrap.
Multiple theatrical executives spoke to TheWrap this past week on the condition of anonymity and conveyed a sense of grave concern, if not panic, over the possibility of a studio that grossed more than $4 billion worldwide this year and provided many of the box office hits of the past six months being assimilated into another company and having its output dramatically curtailed.
Theater owners could pay a steep price if they do not speak out now. Further consolidation would deal a massive blow to the industry, which still hasn’t recovered from years of weak box office returns hampered by streaming, a pandemic and strikes. This scenario played out after Disney acquired 20th Century Fox in 2019, which led to fewer films in theatrical release overall as Disney turned 20th Century into something of a Hulu movie silo, only recently increasing the studio’s theatrical output.
“I’d say this is a red alert, and everyone in our industry should see it as such,” said one independent theater owner who spoke anonymously given the custom of exhibitors not speaking publicly about the business moves of specific studios. “It’s a serious antitrust issue, and we all need to call it out as such if Paramount and Netflix are really serious about doing this.”
Last week saw the M&A activity around Warner Bros. heat up. Netflix hired an investment bank to advise on a potential bid, while Comcast President Mike Cavanagh signaled he was open to looking at its streaming and studio business, even if the bar for a deal remained “very high.”
As such, plans are in motion for such a response, including at Cinema United, the trade organization that serves as movie theaters’ primary lobbying voice in the U.S.
An individual with knowledge of discussions at Cinema United said that the trade organization is speaking with member theater chains and other key stakeholders about a potential Warner-Paramount merger — still seen as the most likely scenario given the Trump administration’s signal of support — and how an industry-wide response opposing it should take form, particularly as it pertains to a reduced number of films being made for theaters and their customers.
Warner Bros. Discovery and Paramount Skydance declined to comment for this story.
Optimism dashed
Prior to this, the theater industry was feeling pretty good about the direction it was headed. After weathering the pandemic and the 2023 double strikes, movie theater owners and executives publicly expressed optimism about the years ahead, especially with several studios making noise about releasing more films in theaters and Amazon MGM planning to release full theatrical slates starting in 2026.
The formation of Paramount Skydance fueled that optimism, as new CEO David Ellison told CNBC that his studio was aiming to increase its annual theatrical slate to 15 films by 2027. In an earnings call in August, AMC CEO Adam Aron said he saw Paramount’s acquisition by the production company behind “Top Gun: Maverick” as a net positive for theaters, as Skydance would give the studio the funds needed to produce more movies.
“Paramount has been cash hampered in recent years, which has caused them to greenlight fewer movies than they might have liked to. It appears to us that Skydance is cash rich, and it would be our expectation that Skydance will be releasing more movies coming out of Paramount than Paramount has been releasing in recent years,” Aron said.
An individual with knowledge of Ellison’s film strategy told TheWrap that the theatrical model is at the core of the CEO’s vision for building franchises and expanding the types of films Paramount produces. Meanwhile, Bloomberg reports that Ellison wants to keep key creative teams at both Paramount and Warner should a merger go through even if marketing, distribution and streaming teams are consolidated, and hopes to use AI and other new technology to eventually increase the annual release rate to as much as 30 films.
Among the five exhibitors who spoke to TheWrap, one exec from a regional chain did express cautious optimism that having Warner under Paramount’s umbrella would encourage further production because of Ellison’s public comments calling theaters essential to the studio’s business.
But overall, the optimism that came with this past summer’s merger has turned to concern or outright fear. And exhibitors’ recent encounters with Hollywood’s M&A wave have left many of them skeptical about any promises that this time will be different.
‘Worst-case scenario’
While the cautiously optimistic exec stressed that he would prefer Warner not be bought up by any major competitor, he would much rather have Warner be owned by a studio that values the theatrical model as opposed to Netflix, which continues to release only a precious few films in theaters with curtailed windows that many exhibitors refuse to accept.
“We’ll at least get another ‘Minecraft’ movie on our screens under Paramount. They know they’d get the most out of the IP they’re buying through theaters,” the exec said. “Netflix? That’s probably all gone. DC, New Line horror, all of it. Netflix would be the worst-case scenario for me.”
The concern is that Netflix, which largely covets the valuable Warner Bros.-owned IP, would keep most of it locked behind its streaming service, depriving theaters of potentially lucrative blockbusters. When asked about its theatrical strategy, co-CEO Ted Sarandos told investors on its earnings call two weeks ago that he was committed to releasing a majority of its films exclusively on its service.
But recent history shows that any M&A leads to fewer movies. 20th Century Fox released between 12-17 movies each year between 2013 and 2018. But after being absorbed into Disney as 20th Century Studios, it has never released more than five films in a single year. Just four 20th Century films are currently slated for release in 2026, with a fifth expected to join the slate soon.
While Warner Bros. has had its fair share of box office duds this year like “Mickey 17” and “Alto Knights,” it has earned an excellent $1.85 billion in domestic box office grosses from 11 films in 2025, including seven consecutive with $40 million-plus opening weekends. That’s the studio’s best total since 2018 — the year of “A Star Is Born,” “Aquaman” and AT&T’s completed acquisition of Warner — in which it grossed just over $1.9 billion from 20 new releases.
Under Paramount’s ownership, could Warner match even the comparatively curtailed output of 2025 while linked to the cash flow of a parent studio that is also trying to reach its own goal of 15 films per year? Those in Ellison’s circle who spoke to Bloomberg say yes; but after what happened with 20th Century, one exec at a major chain doesn’t think so.
“Disney promised that they wouldn’t cut back on the number of movies 20th Century was putting out, and then they did,” the exec said. “And yeah, we see that now, and there’s a lot of frustration, but no one said anything at the time.”
Why didn’t theaters say anything? The exec says that in hindsight, he believes it was because theaters either “trusted Disney or were afraid of Disney.” At the time the merger was being weighed, Disney was at the peak of its status as a box office juggernaut with films like “Black Panther,” “Incredibles 2” and “Avengers: Infinity War,” with the latter’s record-shattering follow-up “Avengers: Endgame” still to come.
With Disney holding the keys to movie theaters’ continued wellbeing, perhaps there was a sense of shock and awe at the prospect of Hollywood’s top studio becoming even stronger. At Disney’s CinemaCon presentation in 2019, fresh off the Fox merger, there were audible gasps, murmurs and groans in the crowd when Disney showed its full slate with acquired Fox titles added onto it.
But whether it’s because of the pandemic, rising production costs worldwide, or Disney’s push to cut costs as its stock price has fallen 43% from its all-time high in spring 2021, that sheer volume in 2019 has not been seen since.
Taking a stand
For anyone, not just theaters, who wishes to push back against Warner’s acquisition by any top competitor, impactful organizing will likely have to focus on pressuring state attorneys general to file antitrust lawsuits blocking the merger under the 2023 interpretation of the Clayton Antitrust Act written by federal regulators under the Biden Administration.
A report published last month in the Columbia Journal of Law and the Arts outlined the antitrust case against specifically a Warner-Paramount merger with regards to streaming, theatrical and news media, the latter of which pertains to a scenario in which both CBS News and CNN are owned by a company run by the Ellison family, which has close ties to President Trump.
For theatrical specifically, the Columbia Journal noted that any merger that would lead to a market share of more than 30% would trigger a “presumption of illegality” under Section 7 of the Clayton Act. After its stellar summer at the box office, Warner Bros. has a domestic market share of 26.9% while Paramount has 6.3%, for a combined share of 33.2%.
Granted, that market share will decrease substantially in the next two months, as Warner has no more films coming out this winter while Disney’s “Zootopia 2” and “Avatar: Fire and Ash” will add to its current 24.7% annual market share.
But even if Warner and Paramount’s combined share drops below 30% by year’s end, Columbia notes that the box office is already considered a concentrated industry by the Herfindahl-Hirschman Index, a legal formula used to determine the amount of competition in a certain industry. The box office has an HHI of 1,758, and Columbia estimates that a Warner-Paramount merger would increase that to 2,123. Any industry with an HHI above 1,800 is considered to be a “highly concentrated” industry.
“An increase of this magnitude, which pushes a market across the ‘highly concentrated’ threshold, creates a powerful presumption that the merger’s effect ‘may be substantially to lessen competition,’” Columbia legal researcher Jared Harbour wrote, citing the 1963 Supreme Court antitrust case “United States v. Philadelphia National Bank” which established the rules of “presumed illegality” in antitrust law.
An increase of this magnitude, which pushes a market across the ‘highly concentrated’ threshold, creates a powerful presumption that the merger’s effect ‘may be substantially to lessen competition. -Jared Harbour, legal researcher for Columbia Journal of Law and the Arts
How far a state-led antitrust suit would get in blocking a merger with federal regulators under Trump’s control and a right-leaning Supreme Court isn’t clear at this point, but whether the chosen bidder is Paramount, Netflix or someone else, the major chain theater exec also believes that the pushback from theaters needs global, not just national.
While Cinema United is looking to expand its reach worldwide, movie theaters around the world have various trade organizations that represent them in politics such as the International Union of Cinemas (UNIC), which is Cinema United’s equivalent in Europe. Those overseas unions could push international regulators to block the merger as Warner Bros. has an impact not just on the global box office but on film production, with film and TV production lots in the U.K., Australia and other regions.
“Trump isn’t going to be a factor with the European regulators,” the executive said. “But a Warner merger is going to be a factor with every movie theater around the world.”
