Netflix to buy Warner/Discovery

[Rick Cohen]

One big question is what will Netflix do with Warner’s library. So many theaters book warners titles for repertory programming, not just new release. Hopefully, that doesn’t go away too…

My expectation is that Netflix will move to a Disney business model towards the WB retro library, which basically means all titles are off the table, in the vault, completely unavailable. The reason would be to enhance their value to their own streaming services.

[Harold Hallikainen]

Has there been any independent economic analysis on how profitability of a film varies with the theatrical window? It seems like it would be difficult to determine the streaming income from a film if it is produced and streamed by the same company and just thrown into a subscription. But, for films that are independently produced, run through theatrical distribution, and then are licensed to streaming, it seems like profitability can be determined (studio cut of theatrical run plus streaming license fee less production and promotion costs). What IS the most profitable theatrical window? I suspect it varies with film quality. A major film could have a long theatrical run while lesser films go "direct to video" (streaming). I suspect studios are trying for maximum profitablity on their films Are they getting it right, or would longer theatrical windows be more profitable?

[Frank Cox]

I don't know how you would objectively measure profitability when there are so many factors other than just the "window" involved. Is the movie any good? What's the promotion budget? What's the production budget?

There are so many movies that cost almost nothing to make and ended up bringing in huge profits (Blair Witch Project being the top example of that), movies with huge budgets that flop (Waterworld), and movies that flop on their original release and then live on "forever" (Faster Pussycat Kill Kill).

[Mike Blakesley]

a Disney business model towards the WB retro library, which basically means all titles are off the table, in the vault, completely unavailable. The reason would be to enhance their value to their own streaming services.

Disney had that model long before Disney+ existed. The stated reason back then was they didn't want their old product to be competing with their new product. I suspect the real reason was (and still is), they don't want to bother with booking and collecting minimal rentals on their old stuff and would prefer to focus only on the higher-priced new stuff. Piddly single-showing bookings are more trouble than they're worth to them. The existence of Disney+ just gives them an added excuse now.

[Steve Guttag]

Mike, that isn't true. If you are sub-run, you can book Disney/Fox catalog titles. But, if you want to be 1st run, then, except for Rocky Horror Picture Show, they take the catalog titles off the table. It is total BS. Let cinemas book what they feel will put butts in seats.

[Rick Cohen]

Mike, that isn't true. If you are sub-run, you can book Disney/Fox catalog titles. But, if you want to be 1st run, then, except for Rocky Horror Picture Show, they take the catalog titles off the table. It is total BS. Let cinemas book what they feel will put butts in seats.

The issue with Netflix is that their business model is the opposite of putting butts in seats, but is designed to keep butts at home and out of cinemas.

[Mark Ogden]

The issue with Netflix is that their business model is the opposite of putting butts in seats, but is designed to keep butts at home and out of cinemas.

That may be their business model. Their goal, however, is to make money, and also to keep the creative community happy. I can't help but notice that the last episode of Stranger Things is getting a 500 screen theatrical release. It's only for two days and it runs at the same time as the streaming premier, but they are doing it to keep the show's producers happy, and to score an extra buck or two. It's likely that the vast majority of people who go will be subscribers who could be sitting at home watching it, but they'll be coming out all the same for the unique experience. As long as there is a dime to be made from theatrical, they will do it, because there will be people interested in their content who want the big-screen thing. The windows won't be as long, though, and there will be simultaneous releases.

Speaking of business models: in 1969, Warner Bros. was purchased by Kinney, a company whose business model was running funeral homes, parking garages and janitorial services. The entertainment media at the time was aghast that a classic studio like WB was going to be owned by people who made their money embalming corpses, but they wound up doing a credible job of it, so much so that the other businesses were spun off and they became pure-play media before getting merged into Time Warner in '89. There are Kinney era WB titles that are classics of cinema. What I am saying is: wait and see what happens. Netflix at the end of the day is a movie company. They aren't going to abandon theatrical, at least not for Warner intellectual property. I see don't see any of the DCU films, which they will now will run, going straight to streaming without a cinema release.

Besides, while I am not into gambling, I would give 60/40 or better against the whole deal happening in the first place. Everybody, and I mean everybody that's not a WB or Netflix shareholder is lined up against it.

[Steve Guttag]

Netflix's goal is subscriptions. That is their pay-day. If they have subscribers, they are getting paid. If they have people watching content, they are getting some pay via advertising (depends on your subscription level). However, without subscriptions, they don't get any ad revenue either. They will do whatever they feel will increase subscriptions.

[Mark Gulbrandsen]

All of this is leading up to streaming taking over and causing the demise of Large scale Cinemas. Look for the chains to start disappearing after some entity buys out the next studio. The second thing that is going to help that along are the soon to be available modular LCD panels for the home. People won't be stuck with the typical 70 inch screen or PIA projector any more, These panels ae already available now, and only the price needs to drop for it to become "home" feasible, exactly the same way LCD TV sets did.

[Frank Cox]

https://variety.com/2025/film/column...os-1236601216/

[QUOTE] Is Netflix Trying to Buy Warner Bros. or Kill It?

Why does Netflix want to buy Warner Bros.? In an era of mergers and megadeals, an age where content is king, a question like that might seem beyond naïve. As a newly, hugely bulked-up version of itself, Netflix will be ingesting a mountain of creative content that’s nearly mythological in its reach: everything from Clint Eastwood movies to the DC empire to “The Wizard of Oz” to the fabled HBO catalogue. Simply as an opportunity to expand what Netflix offers its streaming subscribers, the deal to buy Warner Bros. feels like some sort of ultimate bonanza. The sale itself still needs to get regulatory approval, and there’s an actual chance that that might not happen, but taken as a nervy commercial act of late capitalism, the Netflix/Warners deal needs no explanation. The bottom line is clear.

But a larger question hovers in the air: If Warner Bros. Discovery is, at heart, a movie studio, what does it mean for a streaming service to buy a movie studio? The Amazon acquisition of MGM is not an instructive paradigm; when that happened, MGM was no longer a force in making movies — it was essentially a back catalogue (principally the James Bond films, and also the “Rocky” franchise), so there was an essential logic to that merger.

Warner Bros., however, remains a powerhouse of a movie studio. It’s one of the only companies that’s keeping movies as we’ve known them alive — this year alone, the high-profile release of such creatively daring and popular movies as “Sinners,” “Weapons,” and “One Battle After Another,” along with popcorn films as potently commercial as “A Minecraft Movie” and “The Conjuring: Last Rites,” demonstrates that Warner Bros. is a company that’s helping to sustain not just the business of movies but the dream of movies: the ideal of larger-than-life entertainment experienced by audiences in movie theaters as a vital and essential popular art form. Some people think movies are going the way of the horse-and-buggy. A company like Warner Bros. has been the tangible proof that they’re not.

Ted Sarandos, the co-CEO of Netflix, has a different agenda. He has been unabashed about declaring that the era of movies seen in movie theaters is an antiquated concept. This is what he believes — which is fine. I think a more crucial point is that this is what he wants.
The Netflix business strategy isn’t simply about being the most successful streaming company. It’s about changing the way people watch movies; it’s about replacing what we used to call moviegoing with streaming. (You could still call it moviegoing, only now you’re just going into your living room.) It in no way demonizes Sarandos — he’d probably take it as a compliment — to say that there’s a world-domination aspect to the Netflix grand strategy. Sarandos’s vision is to have the entire planet wired, with everyone watching movies and shows at home. There’s a school of thought that sees this an advance, a step forward in civilization. “Remember the days when we used to have to go out to a movie theater? How funny! Now you can just pop up a movie — no trailers! — with the click of a remote.”
But ask anyone who loves going out to a movie and watching it on the big screen with a packed audience if the Netflix vision of things is really an advance. In certain ways it is…but in many ways it isn’t at all. Is watching a sports contest at home an “advance” over being there in an arena or stadium? Is ordering food at home an “advance” over going out to a restaurant? The Sarandos vision of the-future-is-now-and-you’re-doing-it-all-at-home is both a technological inevitability and, taken to its literal extreme, a cloistered form of cultural stuntedness.
But Sarandos is a shrewd tycoon. To make his agenda go down easier, he has created a kind of smokescreen around himself of “old-school movie love.” He describes himself as a cinephile. He has purchased and refurbished several fabled old movie theaters (the Egyptian in L.A., the Paris in New York) and uses them as a boutique billboard for his brand. “Look, Netflix still loves movies!”
And once in a while, a Netflix movie even gets to play in a movie theater — though not for long, and not in very many theaters. (You can usually count them on two hands.) One of my long-standing cynical japes is that because the movie theaters where Netflix programs its year-end awards-bait movies — from “The Irishman” to “Roma” to “The Power of the Dog” to this year’s “A House of Dynamite” — are just about all in New York and Los Angeles, where the majority of entertainment journalists live, the journalists have a skewed vision of how marginal the releases are. It’s playing at a theater near them, so the release seems viable. Sarandos made a special deal with Greta Gerwig, whose upcoming “Narnia” will play in IMAX theaters for two weeks before showing on Netflix. Yet even Gerwig had to push hard for that. You could feel the gritted teeth through which Sarandos agreed to the deal.

Once he owns Warner Bros., will Sarandos keep using the studio to make movies that enjoy powerful runs in theaters the way “Sinners” and “Weapons” and “One Battle After Another” did? In the statement he made to investors and media today, Sarandos said, “I’d say right now, you should count on everything that is planned on going to the theater through Warner Bros. will continue to go to the theaters through Warner Bros.” He added, “But our primary goal is to bring first-run movies to our members, because that’s what they’re looking for.” Not exactly a ringing declaration of loyalty to the religion of cinema.
And given Sarandos’s track record, there is no reason to believe that he will suddenly change his spots. A letter sent to Congress by a group of anonymous Hollywood producers, who voiced “grave concerns” about Netflix buying Warner Bros., stated, “They have no incentive to support theatrical exhibition, and they have every incentive to kill it.” If that happens, though, I have no doubt that Sarandos will be smart enough to do it gradually. Warner Bros. films will probably be released in a “normal” fashion…for a while. Maybe a year or two. But five years from now? There is good reason to believe that by then, a “Warner Bros. movie,” even a DC comic-book extravaganza, would be a streaming-only release, or maybe a two-weeks-in-theaters release, all as a more general way of trying to shorten the theatrical window, which could be devastating to the movie business. Do we know all this to be true? No, but the indicators are somewhat overpowering. (He’s been explicit about the windows.) Given that, why would Sarandos even need a movie studio to add to his streaming universe? If he really wants to make “Sinners,” he could make it today.
All of which brings me back to the question of why Netflix is buying Warner Bros. Yes, the new Netflix will be sitting on an awesome fresh mountain of content. But will the company continue the legacy of that content, collaborating with audacious filmmakers, giving them the resources to dream big, exhibiting their visions in the largest and grandest form possible? Or will all that gradually melt away? As much as one wants to give the new company a chance, it is hard, at this moment, to resist the suspicion that the ultimate reason Netflix is buying Warner Bros. is to eliminate the competition./QUOTE]

[Mike Blakesley]

Mike, that isn't true. If you are sub-run, you can book Disney/Fox catalog titles. But, if you want to be 1st run, then, except for Rocky Horror Picture Show, they take the catalog titles off the table. It is total BS. Let cinemas book what they feel will put butts in seats.

First run is what I was referring to. They don't want to book old content in first-run theaters because they don't want to be competing with themselves in the first runs.

There was a discussion at a conference at CinemaCon about this a couple years ago. Representatives from one of the sub-organizations had written up a report showing Disney how they could make at least $20 million a year from allowing matinee showings of their classics in mainstream first-run theaters. Their response was: "That's not enough money to bother with."

Sarandos said, “I’d say right now, you should count on everything that is planned on going to the theater through Warner Bros. will continue to go to the theaters through Warner Bros.”

He just forgot to add, "...since we don't own the company yet."

[Marcel Birgelen]

Cinema will never completely disappear, but it would be ignorant not to acknowledge that we're in for a rough ride with all the current developments.

Mike, that isn't true. If you are sub-run, you can book Disney/Fox catalog titles. But, if you want to be 1st run, then, except for Rocky Horror Picture Show, they take the catalog titles off the table. It is total BS. Let cinemas book what they feel will put butts in seats.

Disney still operates in the 80s and 90's mode of artificial scarcity, where they made a killing every time they re-released one of their back-catalog items first to cinema and then back to rental and video. Meanwhile, most of those features are available, flat-fee on Disney+... But looking at the track record of Disney's big releases over the last years, I'd say Disney has seemingly completely forgotten how to make money with movies...

For now, most Fox repertoire titles still remain available around here, either directly via Fox or via third parties like The Criterion Collection. I'm not sure what the policy is on new releases under the Fox label.

Amazon's approach seems to be more pragmatic, at least they have a halfway functioning content licensing division...

Netflix, on the other hand, seems to see cinema as a competitor, one they have to play ball with, in order to qualify for Oscar nominations.

[Mark Ogden]

So Paramount just added another $20 billion to their bid. Did I say 60/40 above? Make it 70/30.

[Mike Blakesley]

I don't know enough about all this high-financial stuff, but I'm a little surprised that Universal/Comcast hasn't been more agressive with this. They seem able to benefit more from it than anyone, considering all the infrastructure they have in addition to their own studio (theme parks). This'd be a great way for them to drive another stake into Disney. Although they did just spend many billions building a new park and a couple of hotels in Florida, so maybe they aren't as flush as they might have been.

[Ian Puffenberger]

One big question is what will Netflix do with Warner’s library. So many theaters book warners titles for repertory programming, not just new release. Hopefully, that doesn’t go away too…

Physical media for WB films will go away as well. That's everything from LOTR and Nolan 4Ks all the way back to Casablanca and all MGM titles before the late '80s.