00:00Warner and Netflix together will create value for consumers, more opportunities for the creative community.
00:06This consolidation would increase incentives to divert major releases away from theaters to streaming only on Netflix.
00:14That would reduce consumer choice and threaten the viability of movie theaters.
00:20Executives from Netflix and Warner Brothers Discovery defending their merger against lawmakers' concerns that it would hurt streaming competition and movie theaters.
00:28Joining us now is Michael Leary, president and CEO of Cinema United, the movie theater trade group, which represents 31,000 movie screens in all 50 U.S. states and Canada.
00:38Michael, thank you for joining us.
00:39And you've been pretty outspoken on this.
00:41This is going to hurt movie theaters.
00:42What about this deal will change the industry?
00:46Well, thank you very much for having me.
00:48There's no question that the deal is currently constructed would be a loss for movie theaters, for people who enjoy seeing movies in theaters,
00:56for communities all over this country and around the world.
00:59And I think at the end of the day, it will end up being bad for the industry.
01:03Historically, when you see these types of transactions, the production of movies for theaters goes down,
01:09the price for consumers go up, and the access to things like the Warner Brothers Library becomes harder and harder.
01:16So what you end up with is fewer choices for consumers at a higher cost.
01:21And I do think that we're in a situation in the theatrical exhibition industry right now where we're very bullish on the future,
01:29and we're building towards a positive future.
01:31And to have a reduction in production of movies for theaters and have price increases is just not what's needed at this point
01:38to keep this industry going the way that it should.
01:41Michael, I sympathize with concerns about theater releases.
01:47One battle after another came out, and I went to see it twice at the movie theater, once at an Alamo, once at an AMC.
01:53But so many people that I asked about it said, when is it coming to streaming?
01:57Like, how much of this is just consumer choice?
02:00They're too lazy, too busy, or it's too expensive to go out, and they'd rather just watch it from the comfort of their couches.
02:06Well, first of all, thank you for going to the theater twice.
02:09It's an excellent movie.
02:10I've seen it as well at my local Alamo.
02:12I would say this is a very complicated question.
02:15There's no doubt that coming out of the pandemic that some people's habits changed.
02:19You see that in terms of people not going out to dinner.
02:22Some people not even want to go back to the office for work.
02:26That is true.
02:27But I think there's also other things going on in the marketplace which are pushing people to seeing it on streaming.
02:32One of the things that we talk a great deal about is the conflation of windows, which is the time that a movie is in theaters.
02:40That has been shrinking more and more over time.
02:45And one of the big fears we have with Netflix is they will completely collapse that window,
02:50and everybody will be in a position where they just say, let's wait and see it on streaming.
02:55One of the things that makes us optimistic about the future is that when you look at the data,
02:59young people, Generation Z, are going to movies more than they have any time in the past.
03:05It's increased 25% in the last year.
03:09People between the ages of 10 and 24 list going to the movies as their number one activity.
03:16So we believe we're building the next generation of moviegoers.
03:20What we need is a marketplace which stabilizes, puts movies in theaters for a sufficient amount of time
03:25so that they can be seen by the public, can build world word of mouth,
03:30and that people will go see them in the theaters.
03:32That surprises me.
03:33I don't care how big your basement is or how big a screen you have.
03:36Because I'm just like thinking of a 10-year-old who, I mean, hopefully most aren't like this,
03:41but I feel like I see out in the wild kids who are just like tied to phones,
03:44that are looking at iPads constantly and are so used to tiny screens in front of them.
03:48What's changing?
03:49What's leading that if you're seeing younger generations going to movies?
03:52I'm not giving my 10-year-old a phone.
03:54That's insanity.
03:55I know you wouldn't.
03:56That is a horrible parenting decision.
03:58But you see it all of the time.
04:00You honestly do.
04:02Sure.
04:02Yeah.
04:03I think part of it is there's a growing recognition that young people in particular
04:07are spending too much time on their phone and too much time on screens.
04:10And when you talk to the people in Generation Z and some of these younger folks,
04:14part of the reason they go to the theater is to get away from that,
04:18is to have a break from the constant bombardment of information they're getting on the phones.
04:24There was recently an article where a Hollywood actor said that when you're making a movie for Netflix,
04:30you have to, throughout the movie, repeat what the plot is because people are so distracted
04:35when they're watching it at home that you have to keep reminding them of the plot lines.
04:39When you go to a theater, that is a wholly immersive experience,
04:42and you're focused on one thing, and that's enjoying a movie on the big screen.
04:46Michael, that just made me think.
04:47So I went to the premiere of this Netflix movie called The Rip,
04:50and I was talking to a filmmaker there who said kind of something what you were saying,
04:54but saying the beginning of a movie now always has to have explosions.
04:59Like, within the first couple minutes, there needs to be some crazy kind of action
05:02because the assumption is that people are at home, they're going to be distracted,
05:06and they need something to actually keep their butts on the sofa.
05:10Not just kind of how people...
05:11And off the phone.
05:12And off the phone.
05:13That again.
05:14I mean, has this not just, like, kind of changed the landscape of what movies actually look like?
05:20Is there not just, like, a permanent shift of not only the form and where we watch it
05:24and what screen it's on, but how movies are actually being constructed and filmed?
05:29I don't know that it's a permanent shift.
05:31I think we're constantly...
05:32We are in a consumer-facing business, right?
05:33So we're constantly trying to meet the consumers where they are and what they want to see.
05:37There's no doubt that there's a lot of energy around action and suspense films,
05:41but there's a lot of other great movies out there where nothing explodes.
05:44I'll give you an example.
05:45One of my favorite movies this year is Hamnet.
05:47There's no explosions in that.
05:49And so I think that there's a diverse audience out there that wants to see different things,
05:53and what we're trying to make sure is that there's not, in the name of, you know, consolidation,
05:59there are more options for people to see different things.
06:02So it doesn't just become what that person was telling you,
06:06something where everything has to blow up and it has to be, you know, a superhero movie.
06:10It has to be this.
06:11It has to be that.
06:11We want more choice for consumers, not...
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