Why insiders worry Netflix’s blockbuster battle to purchase Hollywood’s strongest movie studio will result in the loss of life of the large display screen

With its vast financial bets, corporate mudslinging, White House intrigue and panicked A-list stars predicting doom and disaster, it’s a blockbuster Hollywood battle that surely deserves the ‘big screen’ treatment.

Although many fear the current titanic struggle for Warner Bros, the most prestigious name in the history of film-making, could actually spell the death of the cinema instead.

On one side are the champions of ‘old’ Hollywood who cherish the value and shared audience experience of watching films in cinemas.

On the other is Ted Sarandos, co-CEO of streaming leviathan Netflix, who earlier this year was scathing about the traditional ‘movie-theatre’ model and has branded cinemas an ‘outmoded’ relic of a bygone era.

Despite foolishly betting $100million (£75 million) on the programme-making skills of the Duke and Duchess of Sussex, Sarandos has a reputation for hard-headed business acumen.

Warner Bros has accepted his $83billion (£63 billion) bid – which has still to be approved by the US government – to buy most of the company.

But just as it appeared that this might be the knock-out blow which secured Sarandos the deal, a hostile bid came in from another big Hollywood studio, Paramount Skydance, with the backing of some of the world’s most powerful movers and shakers. Not least Jared Kushner, Donald Trump’s son-in-law, who is a partner in the Paramount offer.

Trump himself – or his administration – will have to decide whether the Netflix-Warner deal is anti-competitive. Which has also given old ‘Hollywood’ hope.

Yet Sarandos is still front-runner in the eyes of many analysts, for Paramount has its own hurdles to clear, as we shall see. And his vision for the industry is nothing less than revolutionary.

His company, which by the standards of the 102-year-old Warner Bros, is barely out of nappies, uses algorithms to predict what viewers will want to watch prior to producing them.

Opponents of the Netflix-Warner Bros deal – who include film fans, movie-makers and cinema owners – say a struggling Hollywood’s malaise will get even worse if Netflix’s algorithm-loving, cost-cutting and risk-averse bosses get their hands on the studio.

Crucially, say critics, Sarandos believes the whole idea of making films for people to watch in cinemas as a communal experience is becoming obsolete.

The multi-millionaire businessman insists that declining box office takings – which were worsened by the social distancing enforced by the pandemic – is an indication that people prefer to watch films at home.

And if he becomes the most powerful person in Hollywood – as this deal would undoubtedly make him – he can ensure that trend becomes inevitable and irreversible. An unnamed leading British producer told entertainment industry website Deadline: ‘This feels like the death of Hollywood.’

Netflix – the biggest streamer and the biggest ‘content’ creator in California – does make its own movies and a few of them have been very good. However, of the ten that have been nominated for the Best Picture Oscar, and which Netflix cynically put on very limited release in cinemas so they can qualify for the award, none has ever won.

Given that streaming has already transformed the economics of making movies and turned Hollywood upside down, it’s not difficult to see why industry old hands quake at the prospect of Netflix turning its immense power into a competition-killing stranglehold.

For at stake is not just Warner Bros, which has made everything from Casablanca, Citizen Kane and The Exorcist to Friends, Joker and the Harry Potter films.

The deal also includes Warner Bros’s HBO, another popular streaming service and the doyen of TV drama, having made acclaimed series such as The Sopranos, Succession, The White Lotus and Game Of Thrones.

If Netflix, which has more than 300 million subscribers, adds some of HBO’s 128 million subscribers, it will become – as one industry expert put it – ‘arguably untouchable’ in the streaming world.

Although Ted Sarandos insists a Netflix-owned Warner Bros will continue to be a film-making powerhouse, and that the deal will lead to more not fewer jobs being created in the entertainment industry, critics are far from convinced.

They argue that Netflix has little intention of building on the studio’s considerable success and merely wants to pad out its back catalogue with the quality ‘content’ that attracts new subscribers and retains existing ones.

As for new films, well, there will generally be nothing worth going to the cinema for. And in the process of encouraging people to watch on smaller screens, it’s claimed, film-makers will be discouraged from thinking on a bigger, grander canvas.

And none nowadays think on a grander canvas than James Cameron, the three-times Oscar winning director of Titanic, Aliens and the Avatar and Terminator films, who insists there is ‘something sacred about the movie-going experience’.

He says it’s ‘no secret’ that Netflix wants to end the practice of films being released in cinemas, and adds it would be a ‘disaster’ if the streaming giant was allowed to buy Warner Bros.

Addressing the Netflix boss, the famously outspoken Canadian didn’t mince his words: ‘Sorry, Ted, but jeez. Sarandos has gone on record saying theatrical films are dead.’

Cameron said the Netflix policy of releasing its best films for no more than two weeks in a small number of cinemas to qualify for consideration for the Academy Awards was ‘fundamentally rotten at the core’.

Cameron and many others in Hollywood believe films that are never shown in cinemas should be banned from the Oscars. 

Jane Fonda, a Hollywood star who worked for Netflix while making the comedy series Grace And Frankie, described the deal as ‘catastrophic’. Her main beef is that it will create an ‘anti-monopoly nightmare’ that will be bad for both viewers and film-makers by sharply narrowing what gets made in Hollywood.

Amid fears that Silicon Valley companies such as Netflix are keen to encourage the use of artificial intelligence extensively in Hollywood – with AI-written scripts and even AI-created actors – Fonda says the deal ‘threatens the entire entertainment industry’.

Opposition is piling up. A letter was sent to the US Congress by a group of anonymous Hollywood producers voicing ‘grave concerns’ about the deal. ‘They have no incentive to support theatrical exhibition, and they have every incentive to kill it,’ they wrote.

Hollywood’s screenwriter union has also called for the deal to be blocked. The British cinema industry has even chimed in, warning the Labour Government that the deal would result in a ‘much thinner’ selection of films for audiences.

In a letter to MPs on both the culture select committee, and business and trade committee, Phil Clapp, the chief executive of the UK Cinema Association, said the takeover would be a ‘significant blow’ to the industry, which is still struggling to recover from the effects of Covid-19.

Some are now pinning their hopes for the future of cinema on Paramount Skydance, which has launched a hostile bid.

It is offering to pay $108 billion (£81 billion) for Warner Bros – more than Netflix has offered, although the deal would include the rest of Warner Bros, including its cable TV companies.

The Paramount bid has one big thing going for it – Donald Trump’s administration will have to decide whether the Netflix-Warner deal is anti-competitive. Trump is not averse to blatant displays of political favouritism and David Ellison, the boss of Paramount Skydance, is the son and business partner of billionaire Larry Ellison, a key Trump ally. 

On top of that is Jared Kushner. As well as this, Warner Bros currently owns CNN and Trump would likely look favourably upon Ellison taking over the cable TV channel that the President loathes and has openly derided.

Like an Old Testament prophet, Ellison Jr has warned grimly that ‘there will be no more competition in Hollywood if this [Netflix-Warner] deal is allowed to come to pass’. But unfortunately for the anything-but-Netflix camp, the Paramount bid controversially relies heavily on billions of dollars coming from the governments of Saudi Arabia, Abu Dhabi and Qatar, which has caused alarm in Washington DC.

A Paramount deal, it’s predicted, would also mean job cuts and fewer films as two major studios consolidate into one – but at least not the death of cinemas.

But might view-at-home Ted Sarandos have a point? Would viewers really miss the cinema experience? The evidence is mixed. Cinema attendance has been steadily slipping since the rise of streaming. About three quarters of adult Americans watched a new feature film on streaming instead of in cinemas at least once in the past year, according to a recent survey.

And yet the huge success of a string of must-see cinema releases including Avatar, Top Gun: Maverick, Barbie and this year’s riotous A Minecraft Movie shows the enduring appeal of people going to see a new film together.

Various prominent directors – including Steven Spielberg, Christopher Nolan, Quentin Tarantino, and Dune adapter Denis Villeneuve – have been forthright about the importance of the cinematic experience while condemning companies such as Netflix for putting films straight out on streaming channels. Some have made clear they wouldn’t have made films if they were destined only for streaming.

Actors, too, have also occasionally dared to condemn a future in which cinemas die out. ‘I love Netflix, but f*** Netflix,’ wailed Helen Mirren. She said that years before this Warner Bros deal. How many more Hollywood insiders must now be muttering the same.