Hollywood fears job cuts as opposition to Netflix-Warner deal grows

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Hollywood is bracing itself for more belt-tightening and job losses if Netflix’s $83bn deal to acquire Warner Bros goes through, as entertainers and the industry’s powerful unions urge regulators to block the transaction.

The Hollywood screenwriters’ guild joined cinema owners — who have long criticised Netflix’s reluctance to widely distribute films for the big screen — in calling for the deal to be blocked. Actress Jane Fonda said the proposed deal “threatens the entire entertainment industry”.

“Lay-offs and the future of [cinematic releases] are the two things the industry is most worried about,” said Stephen Galloway, dean of Chapman University’s Dodge College of Film and Media Arts.

Netflix emerged as the winner of the Warner Bros auction on Friday, topping rival offers from Paramount and Comcast. The proposed deal comes just four months after Skydance closed its $8bn acquisition of Paramount.

The fact that two century-old studios were put on the block so close together is a testament to the disruptive impact of Netflix and the streaming revolution on film and television.

The sales also reflect the deepening incursions into Hollywood by big tech, following Amazon’s acquisition of MGM Studios in 2022 and the launch of Apple’s streaming service in 2019. 

Netflix has roots in Silicon Valley, while the Paramount deal was financed in large part by Larry Ellison, co-founder of Oracle, whose son David is chief executive of the Hollywood studio. YouTube has recently made a strong push into Hollywood, with some of its top influencers opening studios around Los Angeles.  

Talent agents, producers and others in the industry say they are concerned the Netflix-Warner and Skydance-Paramount deals will result in fewer acquirers of TV series and films — and less work in the business overall.

“It’s bad for any industry to just boil down to fewer than a handful of major buyers,” Galloway said. “For the people who work in Hollywood, there’s going to be an income crunch.”

Work in Hollywood started to dry up after the streaming bubble burst in 2022. The downturn worsened a year later during the lengthy screenwriter and actor strikes, which hit film production and delayed cinema releases. Even now, the box office is still well below highs reached before the pandemic.

Hollywood has shed tens of thousands of workers since 2020, and many have left the Los Angeles area to seek work elsewhere. The pain has rippled to other sectors of the economy, from make-up artists and restaurateurs to florists and DJs.

“You’re not getting the money you used to, therefore you’re spending less money, therefore somebody else is not getting income downstream and this triggers a local retrenchment,” Galloway said.

However, Greg Peters, Netflix co-chief executive, said on Friday that the Warner Bros deal would allow the company to expand production in the US and continue investing in original content. “That means more opportunities for creative talent, means more jobs created across the entire entertainment industry,” Peters said.

Asked about whether Netflix would continue allowing Warner Bros to distribute its films on cinema screens, co-chief Ted Sarandos said the company did not “have this opposition to movies into theatres”. 

“Right now, you should count on everything that is planned on going to the [cinema] through Warner Bros” to continue, he said.

Warner Bros chief executive David Zaslav told employees on Friday that he understood there would be “trepidation” about job cuts but said he did not expect there to be many. The deal is not expected to close until the third quarter of 2026 or later.

“The intention is that [Netflix] wants to keep most people, because they don’t have a lot [of employees],” he said, according to a transcript published in Variety. “They don’t have a motion picture studio, they don’t have a big gaming business. And so the fit feels very good for our employees.”

Despite the criticism, some in Hollywood believe that Netflix, with its $425bn-plus market value, is best placed to ensure that Warner Bros avoids the fate of legendary studios that failed to keep up with the times, such as RKO.

“The good news is that Ted Sarandos loves movies, loves television and knows them both extremely well,” Galloway said.   

Tom Nunan, an Oscar-winning film producer and lecturer at the UCLA School of Theater, Film and Television, said he thought Netflix’s record of innovation and focus on technology might give Warner Bros more of a chance to maintain its independence as a studio.

“I’m not as pessimistic as some folks about Netflix being the suitor,” Nunan said.

“Netflix was once a mail-in DVD rental company and it utterly transformed into the dominant streaming player [and] ultimately won the streaming wars. If Warner is going to sell to one of these hyenas, it might as well be the smart one over there who seems to be the alpha.”