Netflix says users can cancel service if HBO Max merger makes it too expensive

A potential deal between Netflix and Warner Bros. Discovery’s (WBD) streaming and movie studio businesses has raised fresh concerns about consolidation in the streaming industry. Attempting to quell fears that an acquisition of WBD’s streaming and movie studio businesses might lead to higher prices, Netflix Co-CEO Ted Sarandos suggested in a Senate hearing today that any merger would have the opposite effect.

During the hearing, which was held by the US Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy, and Consumer Rights, Sarandos sought to convince the senators that Netflix wouldn’t hold a streaming monopoly if regulators allow the acquisition to close.

Netflix is the largest subscription video-on-demand (SVOD) provider by subscribers (301.63 million as of January 2025), and WBD is the third (128 million streaming subscribers, including users of HBO Max and, to a lesser degree, Discovery+).

Speaking at today’s hearing, Sarandos said:

Netflix and Warner Bros. both have streaming services, but they are very complementary. In fact, 80 percent of HBO Max subscribers also subscribe to Netflix. We will give consumers more content for less.

Sen. Amy Klobuchar (D-Minn.) asked Sarandos how Netflix would ensure its subscriptions remain “affordable,” especially after Netflix raised prices in January 2025 despite adding more subscribers.

Sarandos said the streaming industry is still competitive and that previous Netflix price hikes have provided subscribers “a lot more value.”

“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,” Sarandos said.

When pressed further on pricing, the executive argued that the merger doesn’t pose “any concentration risk” and that Netflix is working with the US Department of Justice to institute potential guardrails against further price hikes.

Sarandos claim that a merger would “create more value for consumers” hinges on content quality, not just how much subscribers pay. By his calculations (which he did not share), Netflix subscribers spend an average of 35 cents per hour of watched content, compared to 90 cents for Paramount+, he said.

Downplaying monopoly concerns

Netflix views WBD as “both a competitor and a supplier,” Sarandos said when subcommittee chair Sen. Mike Lee (R-Utah) asked why Netflix wants to buy WB’s film studios, Variety reported. Sarandos claimed that Netflix’s “history is about adding more and more” content and choice.

Sarandos further argued that streaming is a competitive business and pointed to Google, Apple, and Amazon as “deep-pocketed tech companies trying to run away with the TV business.” He tried to downplay concerns that Netflix could become a monopoly by emphasizing YouTube’s high TV viewership.

Nielsen’s Gauge tracker shows which platforms Americans use most on their TVs (as opposed to laptops, tablets, or other devices). In December, it estimated that, excluding YouTube TV, YouTube had more TV viewership (12.7 percent) than any other SVOD service, including Netflix, which was in second place at 9 percent. Sarandos said Netflix would have 21 percent of the SVOD market if it merges with HBO Max.

We’re in the middle of what’s expected to be a long series of arguments as Netflix competes with Paramount Skydance to acquire WBD’s assets. Netflix recently amended its $72 billion offer to an all-cash offer and is looking to buy HBO Max and WB’s film studios for $27.75 per share, or an enterprise value of $82.7 billion. Paramount is seeking a hostile takeover and has sued WBD over its Netflix deal. It has offered $108.4 billion at $30 per share for all of WBD, including its cable channels.