Netflix Says if the HBO Merger Makes It Too Costly, You Can At all times Cancel

There may be concern that subscribers is perhaps negatively affected if Netflix acquires Warner Bros. Discovery’s streaming and film studios companies. One of many greatest fears is that the merger would result in greater costs on account of much less competitors for Netflix.

Throughout a US Senate listening to Tuesday, Netflix co-CEO Ted Sarandos prompt that the merger would have an reverse impact.

Sarandos was talking at a listening to held by the US Senate Judiciary Committee’s Subcommittee on Antitrust, Competitors Coverage, and Client Rights, “Analyzing the Aggressive Affect of the Proposed Netflix-Warner Brothers Transaction.”

Sarandos aimed to persuade the subcommittee that Netflix wouldn’t develop into a monopoly in streaming or in film and TV manufacturing if regulators allowed its acquisition to shut. Netflix is the biggest subscription video-on-demand supplier by subscribers (301.63 million as of January 2025), and Warner Bros. Discovery is the third (128 million streaming subscribers, together with customers of HBO Max and, to a smaller diploma, Discovery+).

Talking on the listening to, Sarandos mentioned: “Netflix and Warner Bros. each have streaming companies, however they’re very complementary. Actually, 80 p.c of HBO Max subscribers additionally subscribe to Netflix. We are going to give customers extra content material for much less.”

Through the listening to, Democratic senator Amy Klobuchar of Minnesota requested Sarandos how Netflix can be certain that streaming stays “inexpensive” after a merger, particularly after Netflix issued a worth hike in January 2025 regardless of including extra subscribers.

Sarandos mentioned the streaming business continues to be aggressive. The chief claimed that earlier Netflix worth hikes have include “much more worth” for subscribers.

“We’re a one-click cancel, so if the buyer says, ‘That’s an excessive amount of for what I’m getting,’ they will cancel with one click on,” Sarandos mentioned.

When pressed additional on pricing, the chief argued that the merger doesn’t pose “any focus threat” and that Netflix is working with the US Division of Justice on potential guardrails towards extra worth hikes.

Sarandos claimed that the merger would “create extra worth for customers.” Nevertheless, his thought of worth isn’t nearly how a lot subscribers pay to stream however about content material high quality. By his calculations, which he supplied with out additional particulars, Netflix subscribers spend a mean of 35 cents per hour of content material watched, in comparison with 90 cents for Paramount+.

The Netflix stat is much like one supplied by MoffettNathanson in January 2025, discovering that within the prior quarter, on common, Netflix generated 34 cents in subscription charges per hour of content material seen per subscriber. On the time, the analysis agency mentioned Paramount+ made a mean of 76 cents per hour of content material seen per subscriber.

Downplaying Monopoly Considerations

Netflix views Warner as “each a competitor and a provider,” Sarandos mentioned when subcommittee chair Republican senator Mike Lee of Utah requested why Netflix needs to purchase WB’s movie studios, per Selection. The streaming government claimed that Netflix’s “historical past is about including increasingly more” content material and selection.

Through the listening to, Sarandos argued that streaming is a aggressive enterprise and pointed to Google, Apple, and Amazon as “deep-pocketed tech firms making an attempt to run away with the TV enterprise.” He tried to downplay issues that Netflix may develop into a monopoly by emphasizing YouTube’s excessive TV viewership. Nielsen’s The Gauge tracker exhibits which platforms Individuals use most when utilizing their TVs (versus laptops, tablets, or different gadgets). In December, it mentioned that YouTube, not together with YouTube TV, had extra TV viewership (12.7 p.c) than some other streaming video-on-demand service, together with second-place Netflix (9 p.c). Sarandos claimed that Netflix would have 21 p.c of the streaming market if it merged with HBO Max.