Netflix Head Insists Warner Bros. Deal Won’t Crush Theaters - "We Didn’t Buy This Company to Destroy That Value"

Netflix sent Hollywood into full panic mode last week with its winning bid for Warner Bros., and the anxiety only escalated when Paramount came out swinging with its hostile takeover attempt.

So on Monday, Ted Sarandos and Greg Peters jumped back on a Wall Street call to cool everyone down, especially those worried Netflix was about to bulldoze theatrical exhibition.

Sarandos wasted no time addressing the concern head on. “In this transaction, we pick up three business we’re not currently in, so we have no redundancies currently,” he said. “One of them is a motion picture studio with a theatrical distribution machine.”

He doubled down on keeping Warner Bros’ theatrical identity intact. “We’re deeply committed to releasing those movies exactly the way they would release those movies today,” making it clear that the streamer plans to embrace the same model the studio has been running for decades.

According to Sarandos, Netflix isn’t swooping in to transform Warner Bros. into a purely streaming pipeline. “All three of these new businesses, we want to keep operating largely as they are,” he added, pointing to the Warner TV production division and HBO as well.

For Netflix, this acquisition puts them in a lane they’ve only dipped a toe into previously. “The theatrical business, we talked a lot about in the past about wanting to do it, because we’ve never been in that business. When this deal closes, we are in that business. And we’re going to do it.”

Netflix has traditionally approached theatrical releases as awards qualifiers, not revenue engines. Its first true wide release came just months ago with the two day rollout of KPop Demon Hunters. The film hit more than a thousand theaters, bypassed AMC, and still pulled in $19 million dollars, becoming the streamers first number one domestic box office title. It arrived in theaters after becoming the most watched movie ever on Netflix, racking up 325.1 million global views.

One of the biggest lingering questions is the theatrical window. Sarandos has danced around the number since the deal was announced. On Friday he said he wanted to see it “evolve,” but his tone shifted on Monday.

“If we did this deal 24 months ago, all those movies we saw this year do so well for Warner Bros. would have been released in the same way in theaters. I’m talking about Minecraft, I’m talking about Superman, I’m talking about Weapons, I’m talking about Sinners,” he said, nodding to the studios gigantic 2025 lineup that is expected to cross $4 billion globally.

He clarified Netflix’s intentions. “These movies will be released on Netflix through theaters the way Warner Bros. did it before, but with the Warner Bros. operating entity. It’s really important the way they create, and the way they drive value. We didn’t buy this company to destroy that value.”

Not everyone in town believes that, though. Some studio executives immediately feared the acquisition signaled the collapse of theatrical and the long tail revenue model that has kept studios financially healthy for decades.

One exec questioned the whole move, asking why Netflix wouldn’t just “continue to license titles at a fraction of the cost” instead of buying Warner Bros. outright.

But cooler heads also chimed in. “One studio alone can’t unilaterally collapse the window,” said one motion picture exec. Another exhibition executive put it more bluntly, noting that if Netflix truly wanted to wipe out theatrical, “they would have bought all three circuits for $20 billion dollars, significantly less than the cost of Warner Bros.”

Still, Sarandos’ well known preference for a shorter seventeen day window remains at the center of the conversation. It was the sticking point that kept Wake Up Dead Man: A Knives Out Mystery out of AMC, Regal, and Cinemark. Netflix refused a thirty day exclusive window before the film hit streaming, and the major chains walked away, even as the movie went on to sell out arthouses.

Meanwhile, Paramount’s David Ellison weighed in during his own Monday call with analysts, promising more than thirty films a year if his company manages to grab Warner Bros Discovery.

Ellison also invoked the anxieties of legendary filmmakers. According to him, talents like James Cameron and Jane Fonda see a Netflix Warner Bros merger “as a disaster for theatrical films.”

For now, Hollywood is stuck in a holding pattern, watching to see whether Sarandos truly intends to support the theatrical ecosystem or reshape it around Netflix’s long term streaming strategy.

The industry may be rattled, but Netflix is insisting it wants a thriving theatrical business, not a diminished one. Whether that philosophy holds once the deal closes is the question everyone is waiting to see answered.

Source: Deadline