Theater group says Paramount, Warner Bros merger 'harmful' to industry

Paramount Skydance's PSKY.O proposed purchase of Warner Bros Discovery WBD.O will consolidate too much power in one company and cause harm to consumers and the industry, the head of a cinema trade group said on Tuesday at the largest convention of movie theater owners.

Warner Bros Discovery agreed in March to be acquired by David Ellison's Paramount Skydance in a $110 billion deal after rival Netflix NFLX.O dropped out of the bidding.

Theater owners oppose the combination of the storied Warner Bros movie studio, maker of the "Harry Potter" and "Superman" films, with Paramount Pictures, arguing it will reduce competition and result in fewer movies in cinemas.

"We believe this transaction will be harmful to exhibition, consumers and the entire entertainment ecosystem," Cinema United President and CEO Michael O'Leary told thousands of attendees at the CinemaCon convention in Las Vegas.

Paramount, the studio behind such entertainment franchises as "Mission: Impossible," "Star Trek" and "Top Gun," is scheduled to present its upcoming movies at CinemaCon on Thursday. Ellison has vowed that the combined company will release 30 movies per year in theaters and that both studios will continue to operate separately, preserving and potentially increasing jobs.

Those steps, along with plans to continue licensing content, "will expand opportunities for creators, enhance consumer choice, and strengthen competition by enabling a well-capitalized, creative-first company to invest in more projects and bring stories to audiences worldwide, including on the big screen," a Paramount spokesperson said in a statement on Tuesday.

Theater owners are skeptical of Ellison's promises, pointing to the cuts that followed Walt Disney's DIS.N purchase of the Fox film studio in 2019. The two companies released 26 new titles in more than 2,000 U.S. and Canadian theaters before they merged. Last year, the combined studio distributed 14 wide releases.

"Unfortunately, history shows us that consolidation results in fewer films being produced for movie theaters," O'Leary said.

He added that the Paramount-Warner Bros deal also would affect movie schedules and the "windows" of time that films play exclusively in theaters.

"Further concentrating marketplace power in the hands of a smaller group of distributors that dictate the terms, windows, scheduling, screen placement of movies, and access to historic film catalogs will have a real and lasting impact on Main Street and millions of movie fans around the world," O'Leary said.

Cinema United will continue urging federal, state and international regulators to block the deal, he added.

Also this week, more than 1,000 Hollywood stars and filmmakers signed a letter opposing the deal.

-Reporting by Lisa Richwine; Editing by Aurora Ellis/Reuters