Netflix-Warner Deal: Producers Guild Urges Senate Committee to ‘Guarantee Meaningful Theatrical Distribution’ in Testimony

The Producers Guild of America urged members of the Senate Judiciary Committee on Tuesday to keep American entertainment workers at the center of its oversight into the potential acquisition of Warner Bros. by Netflix.

“Additional consolidation, vertical integration and reduced competition in our industry will further contribute to sharp reductions in United States-based jobs and productions, and less consumer choice,” CEO Susan Sprung wrote in the letter. “Reduced competition results in lower compensation and fewer opportunities for producers, creators, and other workers. And when a smaller number of companies control what gets made and what gets seen, fewer ideas reach the public.”

While the PGA stopped short of explicitly opposing the merger, the organization echoed many of the concerns over the negative impacts that consolidation has on the entertainment industry, including fewer projects greenlit, fewer films sent to movie theaters and with shorter theatrical windows, and fewer acquisitions of independently produced films and TV shows.

“This is an especially critical moment given how other countries have created lucrative tax and other economic incentive programs to lure away American productions and jobs,” Sprung wrote. “Our request for regulatory intervention is not an attempt to block progress or innovation, but to ensure that America’s entertainment industry continues to be an economic powerhouse and global leader in creativity and content production.”

“Whoever the buyer is, we need their guarantee to expand not contract our content creation industry and the way we are able to view that content,” the letter continued.

The PGA laid out four keys areas that it sought for Netflix or any other buyer of Warner Bros. to follow through on:

• a substantial increase in domestic production to create more American jobs; 
• a minimum of 45-60 day theatrical runs, including robust and effective print and advertising campaigns and sufficient screen counts; 
• the purchase of a meaningful percentage of productions from independent producers and other third parties; and
• strong pro-competitive and pro-free speech conditions. 

The first two points in particular were raised by senators to Netflix co-CEO Ted Sarandos in the Judiciary Committee hearing on Tuesday. Sarandos noted that in New Jersey — the state that the committee’s top-ranking Democrat, Corey Booker, hails from — Netflix is developing a 292-acre production hub in New Jersey to take advantage of the state’s recently expanded production tax incentive.

As for windowing, Sarandos reiterated his commitment to a 45-day theatrical window for Warner Bros.’ films, claiming that his pivot on this front is due to the fact that as part of the acquisition, Netflix will be adding a full theatrical distribution infrastructure that it does not currently have.

“Warner Bros.’ assets are very different from ours. They have a century of iconic IP, they have a world-class theatrical distribution business, and their studios produce and license TV shows to other networks and other streamers,” Sarandos said. “We plan to operate those businesses largely as they are today.”

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