The news: The proposed sale of Warner Bros. Discovery’s studio and streaming assets has intensified regulatory scrutiny and reignited debate over the future of theatrical film.

The US Justice Department has contacted major theater chains to assess how a sale, whether to Netflix or Paramount Skydance, could affect film output and cinema access, per Bloomberg.

• Netflix pledged a 45-day exclusive theatrical window for Warner Bros. films; co-CEO Ted Sarandos said the combined company would deliver more high-quality films to theaters, per Bloomberg.
• Paramount, in its competing bid, promised to release 30 films annually in theaters if it prevails.

Filmmaker James Cameron warned in a letter to Sen. Mike Lee that a Netflix acquisition would be “disastrous for the theatrical motion picture business,” per CNBC.

DOJ is reportedly also probing whether Netflix’s prior acquisitions have reduced competition for creative talent and whether it uses anticompetitive tactics in negotiations with independent creators. Netflix argues it operates in an “extremely competitive” market.

Why it matters: The WBD sale could have a significant impact on a theatrical business still recovering unevenly from pandemic lockdowns, which sped up the migration to streaming and at-home viewing.

• Global box office revenues are projected to reach $35 billion in 2026, up from $30.0 billion in 2024 but still below the $42.3 billion peak in 2019, per Gower Street analysis.
• North America is expected to generate $9.9 billion in 2026, versus $11.4 billion in 2019.

Tepid demand for moviegoing isn’t helping the box office recover:

• 19% of US TV viewers say going to a movie theater delivers “great value,” and 38% say it offers “OK value,” per Hub Research—lower perceived value than most activities surveyed.