NETFLIX, INC. has told management of Warner Bros. Discovery, Inc. that it will keep releasing the studio’s films in theaters if it’s successful in buying the company, people familiar with the matter said.

Warner Bros. has contractual agreements to release movies in theaters, which Netflix would honor, according to the people, who asked not to be identified revealing details of talks between the companies.

Up to now, Netflix has resisted distributing its movies in theaters, and has grown to rival Hollywood’s largest studios without doing so. The possibility of owning Warner Bros.’ deep film library, along with the contractual obligations, has softened that opposition.

Warner Bros. put itself up for sale last month following expressions of interest, including from Paramount Skydance Corp. Netflix, and Comcast Corp., parent of NBCUniversal, are interested in the company’s studio and streaming operations. Bids are due Thursday.

A deal with Netflix would be the largest ever for the streaming service. Executives made a presentation to Warner Bros. management.

The movie industry worries that a Warner-Netflix deal would eliminate another studio and major source of theatrical films. Netflix has given some films limited runs in theaters to qualify for awards and placate talent.

Netflix co-Chief Executive Officer Ted Sarandos has described theaters as a declining business and said the company’s biggest priority is satisfying its streaming customers. — Bloomberg

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