Pandemonium in Hollywood as Netflix Acquires Warner Bros.

On Thursday night, Netflix threw a holiday party for some of its departments at Los Angeles restaurant Delilah, decorating the cozy space with a Tinseltown/Old Hollywood theme. But the holiday cheer quickly dissipated—at least, for everyone besides Netflix executives—after word began to spread that the streamer had won the bidding war to acquire Warner Bros. Discovery.

The news became official Friday morning with the announcement that Netflix had entered into a definitive agreement to buy Warner Bros. in an $82.7 billion deal.

There’s nothing more Old Hollywood than Warner Bros., a storied movie studio established in 1923—one of the 'Big Five' created during Hollywood's Golden Age. Which is precisely why many Hollywood insiders are taking this news so hard. If this deal does go through, Netflix, the streaming giant that swooped in and disrupted the old system—or destroyed it, depending on your point of view—will take control of one of the last remaining Hollywood studios. Plus all the IP and history that goes along with it.

'It’s not just one less buyer. It’s the triumph of the Netflix business model, which is to be the only player in the business—building on years and years of successful work by the creatives they’re now going to fuck over,” one award-winning tv and film writer tells Vanity Fair.

Provided the acquisition does go through, Netflix will take the studio’s most valuable assets—its film and television studios, including HBO Max and HBO. The acquisition doesn’t include Warner Bros. Discovery’s global networks division, which will be spun off into a separate publicly traded company called Discovery Global comprising brands like CNN and TNT Sports, as previously planned.

The outrage has been swift among the Hollywood community. A group of anonymous A-list producers has already released a statement against the merger, saying it would “effectively hold a noose around the theatrical marketplace.” Major unions, like the Directors Guild of America, the Producers Guild, and the Writers Guild have all released statements expressing concern. 'The outcome would eliminate jobs, push down wages, worsen conditions for all entertainment workers, raise prices for consumers, and reduce the volume and diversity of content for all viewers,” says a statement from the WGA. “Industry workers along with the public are already impacted by only a few powerful companies maintaining tight control over what consumers can watch on television, on streaming, and in theaters. This merger must be blocked.'

One of the biggest concerns from many insiders is how Netflix will approach theatrical releases of Warner Bros. movies. A statement from the company said that Netflix “expects to maintain Warner Bros.’ current operations and build on its strengths, including theatrical releases for films.”

'I’d say that right now you should count on everything that has planned on going to the theaters through Warner Bros. will continue to go to the theaters through Warner Bros.,” said Netflix co-CEO Ted Sarandos in a conference call with investors after the announcement of the acquisition.

Sarandos also argued that Netflix already puts movies in theaters—though he didn’t say how long those theatrical releases are. “We’ve released about 30 films into theaters this year, so it’s not like we have this opposition to movies in theaters,” he added. “My pushback has been mostly in the fact of the long, exclusive windows, which we don’t really think are that consumer friendly.”

Most Netflix films, like recent releases (and Oscar hopefuls) Frankenstein and Jay Kelly are released in select theaters for a mere two weeks before hitting the streaming service, if at all. By contrast, Warner Bros.’s theatrical releases traditionally stay in theaters for around 30 to 45 days. Sarandos has been very vocal with his feelings about those exclusivity windows.

Cinema United, which represents over 30,000 movie screens in all 50 states, expressed concern about what the merger might mean for theatrical films in a strong statement, describing it as “an unprecedented threat to the global exhibition business.”

“The negative impact of this acquisition will impact theatres from the biggest circuits to one-screen independents in small towns in the United States and around the world,” said Cinema United President and CEO Michael O’Leary. “Cinema United stands ready to support industry changes that lead to increased movie production and give consumers more opportunities to enjoy a day at the local theatre. But Netflix’s stated business model does not support theatrical exhibition. In fact, it is the opposite.”

Despite Netflix’s public posture, insiders worry that the company’s lip service to theatrical windows will change quickly once the deal is done. “It's real enough to control the initial PR wave, but they’re being vague about [theatrical release plans], and they're being vague about their commitment to Warner Brothers TV studios—because Netflix has never made products for other competitors,” an agent tells Vanity Fair.

Right now, Warner Bros. TV produces shows not only for Warner-owned services and channels, but for various other networks—like Abbott Elementary, which airs on ABC, Netflix's own Running Point, and Apple TV's Presumed Innocent. While Netflix would gain a large scale TV production studio in WBTV, it would also for the first time be making content meant for other distributors—if it kept the model as is.

Overall, the dissolution of any studio in its independent form is a hit to Hollywood, especially those who make movies and try to sell them to the studios to distribute. 'It's worse to have fewer buyers. You just have fewer options. The studios have more leverage, and it breeds less risk taking,' says a film producer. “The climate has been one of tapping down advocacy. It’s as if people are serving accounts. People are looking to safety as opposed to innovation.”

Job losses are inevitable if the acquisition goes through. In a community that’s been buffeted by countless challenges over the past few years, from the pandemic to the 2023 strikes, it’s a bitter pill to swallow. Those inside Warner Bros. Discovery are still recovering from WarnerMedia’s merger with Discovery, which happened less than four years ago, and resulted in significant layoffs.

'Everyone's just like, 'how the fuck is [WBD CEO] David Zaslav going to make so much money when he ran the company into the ground?'' says a studio executive. 'The unjustness of that, when all these people are going to be out of work, it should be illegal.'

At least one lawmaker has something to say about that, too. U.S. Senator Elizabeth Warren described the potential deal as 'an anti-monopoly nightmare” in a statement Friday, adding, 'A Netflix-Warner Bros would create one massive media giant with control of close to half of the streaming market—threatening to force Americans into higher subscription prices and fewer choices over what and how they watch, while putting American workers at risk.'

There's a long road ahead, with a corporate acquisitions process subject to regulatory approval by the federal government. A merger wouldn’t close until after WBD’s global networks division, Discovery Global, spins out into a new publicly-traded company, which the Netflix release stated is pushed to Q3 2026.

“If Washington had any balls, there would be bipartisan agreement to implement a new form of Paramount Decrees to keep movies and television a healthy and competitive market,” says the TV writer. They’re referring to the Paramount Decrees of 1948, considered a bedrock of corporate antitrust law, which were created to prevent movie studios having a monopoly over the production and distribution of films. Those laws were overturned in 2020, but at least some in Hollywood feel like Washington has to get involved in the ever-growing threat to Hollywood as we know it. “But as Deadwood’s Al Swearengen might say,” the TV writer adds, “‘we ain’t that fucking lucky.’”

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