Netflix on HBO Merger: Cancel Anytime if Costs Rise
Concerns have been raised over potential subscriber impacts if Netflix proceeds with its acquisition of Warner Bros. Discovery’s streaming and film studios. Many fear that the merger could lead to increased pricing due to reduced competition. During a recent US Senate hearing, Netflix’s co-CEO Ted Sarandos provided a different perspective.
Senate Hearing on Netflix and Warner Merger
The hearing, conducted by the US Senate Judiciary Committee’s Subcommittee on Antitrust, explored the ramifications of the proposed Netflix-Warner Bros. merger. Sarandos argued that the combination of both companies would not create a monopoly but would actually enhance competition.
Subscriber Statistics
Netflix currently holds the title for the largest subscription video-on-demand service, boasting 301.63 million subscribers as of January 2025. Conversely, Warner Bros. Discovery ranks third with about 128 million streaming subscribers across platforms like HBO Max and Discovery+.
- Netflix Subscribers: 301.63 million
- Warner Bros. Discovery Subscribers: 128 million
Sarandos’ Testimony
During the hearing, Sarandos noted that 80% of HBO Max subscribers also use Netflix. He asserted that the merger would increase consumer access to content at a lower cost. “We will give consumers more content for less,” he stated.
Senator Amy Klobuchar raised concerns about maintaining affordability, especially after Netflix’s price hike in January 2025. Sarandos responded by calling the streaming market highly competitive, emphasizing that past price increases have been justified by greater value. He said, “We are a one-click cancel, so if the consumer says, ‘That’s too much for what I’m getting,’ they can cancel with one click.”
Addressing Monopoly Concerns
Responding to further inquiries about pricing risks associated with the merger, Sarandos contended that it would not concentrate market power. He noted that Netflix is collaborating with the US Department of Justice to establish safeguards against price increases. According to Sarandos, the merger would create more value for consumers, focusing on content quality rather than solely on price.
- Average Cost per Hour of Content: Netflix subscribers spend approximately 35 cents
- Paramount+ Cost per Hour of Content: 90 cents
Additionally, Sarandos characterized Warner as both a competitor and a supplier. Highlighting a competitive streaming industry, he pointed to tech giants like Google and Amazon as key players vying for consumer attention. Mentioning Nielsen’s data, he provided context on Netflix’s standing, indicating that Netflix had a 9% market share in TV viewership compared to YouTube’s leading 12.7%.
The anticipated merger, if approved, could see Netflix capturing approximately 21% of the streaming market by integrating HBO Max. This projection suggests a significant shift in content accessibility and competition in the streaming sector.
