| It has been a difficult last few years for Damon Rubio and his San Diego-based D'Place Entertainment. |
| The small theater and entertainment chain survived through the pandemic, but business has been tough. This year alone, his nine theaters throughout California made huge gains during the summer months before a sleepy fall at the box office wiped all of that out. As of this week, business is "basically exactly even" compared with last year's bleak totals. |
| "There's not much more we can take before we go upside-down," he said. |
| So when he read news reports that bidders were circling Warner Bros., he knew he couldn't waste any time. He sent letters to the congressional leaders who represent the nine districts where his theaters are located, urging them to give "rigorous scrutiny" to any deal. |
| "Any transaction that reduces film output, raises film rental costs, or fails to include a meaningful and enforceable theatrical commitment will have devastating consequences: fewer theaters, fewer jobs, diminished consumer choice, and lasting harm to the systems of production, exhibition, and distribution," Rubio wrote in his letter. "Small-town theaters like ours will be the first to suffer, leading to a future in which only affluent urban communities retain access to local cinemas." |
| His worries are shared by many across the movie exhibition business. |
| Already struggling with changes to movie-going habits wrought by the pandemic and increased streaming content, as well as a roller-coaster year at the box office, theaters are facing the potential of flat domestic revenue for 2025. Add to that worries about the potential implications of a big media deal like the Warner Bros. tie-up, and it's becoming an existential concern for many. |
| More consolidation in the industry, cinema owners say, could mean fewer movies released in theaters. |
| And with fewer movies come fewer opportunities for people to make a habit of going to their local theaters, they reason. |
| "It is very problematic and troubling, no matter what studio is purchasing Warner Bros.," Rubio said. |
| Then, there are the specific worries about each suitor. |
| Netflix has long had a resistance to traditional theatrical film releases, making exhibitors wary that the streamer would truly change its tune for Warner Bros. movies. |
| For Paramount, which recently made a direct appeal to Warner Bros. Discovery shareholders, there's anxiety about whether the company could in fact produce more than 30 films a year, as Chief Executive David Ellison has said would happen if the two companies united. |
| It really is a "stark future for exhibition" said Michael O'Leary, president and chief executive of the Cinema United trade group, of the issues currently facing the movie theater business, as well as the challenges of a potential Warner Bros. transaction. |
| The group is opposed to the current effort from either bidder to buy Warner Bros. Though Cinema United has had conversations with both Netflix and Paramount, O'Leary said he hasn't heard enough detail yet about either plan to move off of that position. It is now lobbying federal and state regulators over their concerns with the deal, including its effect on smaller operators, especially those in rural areas. |
| "If you have fewer films and fewer theaters, that's bad for consumers, that's bad for theater owners, and it's bad, frankly for the entire entertainment industry," he said. |
| In the letter to Warner Bros. Discovery shareholders, Ellison, a life-long film enthusiast, said Paramount did not plan to release fewer movies . |
| "Movies are one of America's greatest exports," he told analysts on a call last week. "We want to lean into that legacy, not diminish it." |
| Netflix, too, has tried to assuage the concerns of theater owners, saying the company will continue to honor the theatrical agreements made for Warner Bros. films. |
| Netflix also plans to continue to release future Warner Bros. films in theaters similar to how the studio currently operates, according to a person familiar with the company who was not authorized to comment. Release windows for future Warner Bros. films would be in line with the industry standards , the person said. |
| For many in exhibition business, the situation is reminiscent of Walt Disney Co.'s $71-billion purchase in 2019 Rupert Murdoch's Fox entertainment assets. Theater owners point to the decreased movie production after the merger and the effect on their business. Other factors have also contributed to the decrease in production, including the pandemic and dual strikes by writers and actors in 2023. |
| For now, all theater owners can do is wait. |
| "We're choosing to be hopeful, and we're continuing to invest in the quality of the experience," said Brian Schultz, chief executive of Dallas-based Look Cinemas, which has four locations in California. "We're hoping our studio partners are going to be there for us." |
Stuff We Wrote |
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Number of the week |
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| Disney's animated sequel "Zootopia 2" has now crossed the $1 billion mark at the global box office, just three weekends after it debuted in theaters . |
| International box office revenue was a big part of that total, particularly in China, where "Zootopia 2" has now grossed $444 million. The film has now surpassed the global and international totals for the original 2016 movie. |
| This is the second U.S. film to reach the $1 billion mark this year, after Disney's live-action adaptation of "Lilo & Stitch." |
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Finally ... |
| My colleague, Amy Nicholson, wrote a beautiful appreciation of Rob Reiner, who was found dead Sunday at his home, along with his wife, Michele. |
| "Reiner's fears and frustrations, his curiosity and his ambition, all fed into his body of work," Nicholson writes. "He delighted audiences while managing to avoid getting hemmed in as an auteur. He let his films' individuality be the star." |
