Netflix and HBO

I understand that Hollywood hates Netflix, and I understand why. It’s unsurprising that Hollywood would oppose anything that makes Netflix more powerful, such as a merger with Warner/HBO. It’s also true that Hollywood has considerable influence within the American left, of which I count myself a member. Those of us left of center tend to sympathize with the political leanings of Hollywood and listen to people who work there.

In this case, that’s a bad idea. Netflix buying HBO may be bad for people who work in Hollywood, but it’s clearly the right thing for the country.

First, consider the alternative. The competing bid is from Paramount, whose offer is led by one of Trump’s biggest donors and backstopped by Jared Kushner and Saudi oil money. Do we really want CNN in those hands? The reflexive opposition to Netflix consolidation ignores who else is at the table.

Second, this is better for consumers—though not in the way media industry people typically think about consumer choice.

Yes, a Netflix-HBO merger would reduce competition and probably stifle some creativity. But I think most people would gladly forgo a little creativity in exchange for paying for one less service. For most people, more streaming services is a false choice. They’re not choosing between the different shows on different services. They’re choosing between the services themselves.

Media critics and others in the literati may have access to all the creativity across all the services. Most families pick the one (or maybe two) that suits them best and stick with it. Netflix is by far the most popular streaming service. I’m confident that most families would prefer having HBO’s content available through their existing Netflix subscription—even if it cost a small premium and even if the programming became less distinct moving forward.

There’s also an underrated frustration in the current media market: simply tracking subscription expenses. Which services did we pay for this month? Which ones auto-renewed that we’re not using? When do the promotional rates expire? For households trying to manage budgets, this administrative burden is real.

The Choice That Isn’t

So while a future for HBO outside Netflix may mean more choice for people working in the entertainment industry, while it may mean more choice for people whose job it is to consume and critique media, and while it may mean more choice for people with lots of disposable income to spend on media, it’s not really more choice for ordinary consumers.

As someone on the center-left, I tend to like and listen to the opinions of people in Hollywood and in the media more broadly. In this case, we shouldn’t. The case against this merger is being made by people whose professional interests are directly at stake. That doesn’t make them wrong, but it should make us skeptical about whether their version of “consumer choice” matches what actual consumers want.

Sometimes consolidation is bad. Sometimes it genuinely reduces competition and harms consumers. But sometimes—and I think this is one of those times—what looks like consolidation from inside an industry looks like simplification from outside it.

P.S. You may have noticed that this is my second newsletter in as many days. I spent about 30 hours over the weekend sitting in the bleachers at the UConn pool waiting for my kids to swim in their big mid-season meet. Needless to say, I spent a lot of time scrolling.