Cinema United Chief Urges Theater Owners to Fight Paramount-Warner Bros. Merger

Cinema United CEO Michael O'Leary is calling on theater owners to resist the proposed merger between Paramount Skydance and Warner Bros., endorsing litigation by state Attorneys General that has already forced the companies to delay closing the $111 billion transaction.

In a letter to members on Wednesday, O'Leary warned that the merger would lead to fewer films, higher costs for theaters and audiences, and ultimately fewer cinemas operating across the country. He argued that public promises of support for theatrical exhibition are "high-level and unenforceable" and do nothing to address the group's concerns.

Cinema United's Case Against the Merger

O'Leary told Cinema United members that he had submitted a sworn declaration supporting the states' successful motion for a temporary restraining order, which has temporarily halted the deal. The declaration outlined exhibitors' concerns about the transaction's potential impact on the theatrical marketplace.

Central to O'Leary's skepticism is Paramount's pledge to release 30 films annually after combining with Warner Bros. — a number he noted exceeds what any other studio currently produces in a year. He also pointed to the combined company's projected debt load of $80 billion, which he suggested could undermine the studio's ability to maintain that level of output.

"We will continue to argue against the expense of this highly leveraged transaction being passed on to theatre owners and movie fans through increased costs," O'Leary wrote. He also pledged to advocate for theaters of all sizes to have access not only to new releases but also to the extensive classic film libraries held by both studios.

"These are not Hollywood issues, they are Main Street issues," O'Leary added, "and we are committed to making them relevant not just for this transaction, but to the long-term future of this vital industry."

A Troubled Dialogue Between Studio and Exhibitors

The relationship between Cinema United and Paramount has grown increasingly strained in the months leading up to the current legal standoff. O'Leary revealed that the organization's executive board requested a meeting with Paramount at CinemaCon, the annual convention for theater owners and studios held last spring, but the invitation was declined.

A subsequent meeting took place in Washington, D.C. in June, where O'Leary outlined Cinema United's reservations about the sale. According to O'Leary, both parties committed to further discussions aimed at reaching enforceable agreements that would address the organization's concerns.

"On July 1, after what Cinema United believed were additional constructive conversations with Paramount, we provided them with a comprehensive list of our concerns to move the discussions forward," O'Leary wrote. "We have not heard from them since."

Paramount, however, tells a different story. A company spokesperson said the studio met with Cinema United in Washington in June and had mutually agreed to work toward enforceable commitments on two specific items requested by the group. According to Paramount, the studio provided those enforceable commitments, but Cinema United's counsel then introduced new demands unrelated to the merger.

The spokesperson also noted that Cinema United uses the same law firm that represents multiple clients opposed to the merger, while adding that Paramount would be "pleased to work with Cinema United or their members as they are our partners."

The Disney-Fox Precedent: A Cautionary Tale

To illustrate his concerns, O'Leary pointed to a recent historical parallel: the Walt Disney Company's acquisition of much of 21st Century Fox in 2019. Following that merger, the number of films produced by the combined companies shrank considerably — an outcome O'Leary fears could be repeated.

"Cinema United has not wavered on our list of concerns and will continue to press for meaningful, tangible guardrails to ensure that this transaction, the largest in the history of Hollywood, does not have the same negative impact on the global box office that you experienced after Disney/Fox," O'Leary wrote.

He criticized the framing of the deal as primarily a "Hollywood transaction," arguing that the real-world consequences for Main Street businesses — independent theaters and regional chains — have been sidelined despite what he described as "well-orchestrated media campaigns attempting to win the public relations battle."

A Divided Exhibition Industry

While Cinema United has positioned itself firmly against the merger, not all theater owners share that stance. AMC Entertainment, the world's largest cinema chain, has publicly endorsed the transaction, praising Paramount and its chief David Ellison as committed advocates for theatrical exhibition.

"I greatly appreciate David Ellison's track record of success and his passion to make movies that will dazzle audiences the world over," AMC CEO Adam Aron said in a statement last April. "In just the short time he has owned Paramount Pictures, he already has begun to assemble a superb team around him and already has been increasing the number of movies being greenlit at Paramount."

The split among exhibitors underscores the complexity of the debate, with some seeing Ellison's leadership as a potential boon for the theatrical sector and others warning that consolidation will inevitably reduce output and raise costs.

What Happens Next: The Legal Roadmap

The merger now faces a significant legal hurdle. On July 24, Paramount reached an agreement with a coalition of state Attorneys General to postpone the Warner Bros. merger until after an antitrust trial takes place. Under the terms of that deal, Paramount has committed not to close the $111 billion transaction until five days after a trial is held or June 1, 2027 — whichever comes first.

This timeline means the deal could remain in limbo for an extended period, giving opponents like Cinema United additional time to build their case and rally support. The temporary restraining order and the subsequent agreement to delay closing represent significant victories for those seeking to block or modify the transaction.

For theater owners, the stakes are considerable. The merger would combine two of Hollywood's major studios, concentrating control over vast film libraries and distribution pipelines in a single entity. Whether the combined company would honor its commitment to release 30 films annually — and whether that promise could be enforced — remains a central question.

Background: Understanding the Stakes

The proposed merger between Paramount Skydance and Warner Bros. represents what O'Leary described as "the largest in the history of Hollywood." The transaction would bring together two studios with extensive film libraries, significant production capabilities, and major distribution networks.

For the theatrical exhibition industry, which has been navigating a rapidly changing entertainment landscape, the merger raises fundamental questions about competition, content availability, and pricing. Cinema United's concerns center on three key areas: the potential reduction in annual film output, the risk of increased costs being passed down to theaters and moviegoers, and access to both new releases and classic library titles.

The debate also highlights a broader tension in the entertainment industry between consolidation-driven efficiency and the preservation of a diverse, competitive marketplace. As the legal process unfolds, theater owners, regulators, and studio executives will be watching closely to see whether enforceable commitments can be established — or whether the deal will proceed without the guardrails that Cinema United and its allies are demanding.

The outcome of this battle could reshape the theatrical landscape for years to come. If you found this analysis valuable, share this article with your network and join the conversation about the future of cinema.

Source: Variety