Source : @Variety
LOS ANGELES — Netflix’s co-chief executives have acknowledged that a slowdown in US viewing and advertising sales lay behind last week’s dramatic overhaul of the streamer’s content leadership, telling Wall Street analysts on Tuesday (Oct 20) that the company is now “focusing on execution”, Variety reported.
Speaking on the company’s third-quarter earnings call, Ted Sarandos and Greg Peters addressed the decision to oust chief content officer Bela Bajaria and film chief Dan Lin. Former Fox and Disney executive Peter Rice was appointed on Oct 15 as Bajaria’s successor and starts next week. The streamer also let go Lin’s top lieutenant, Doug Belgrad, and director of original series Carolina Garcia, as part of a round of about 1,000 job cuts, roughly 6 per cent of its workforce.
“I know that we could do better, and we want to build on that momentum,” Sarandos said when asked about the changes. He praised Bajaria for “an incredible decade-long run”, saying she had “put a lot of great hits on the board” and built the international team behind Netflix’s local-language content. “Now we’ve seen an opportunity to take our slate to the next level, especially in the US, where we can have an outsized impact when we create a big buzzy show that members love and talk about all over the world.”
Sarandos added that the company had delivered “some really solid doubles and triples this year”, but that other territories rely on some titles becoming “home runs” that travel globally. He pointed to strong slates in India, South Korea, Japan and the Nordics as “proof that when we have the right focus, make the right choices and deliver creatively, we can drive outsize impact on the business around the world.”
Peters sought to reassure analysts that Netflix’s fundamentals remain strong despite the soft patch in the US. He said churn, the rate at which subscribers leave and rejoin the service, had improved globally and in the US in the quarter ended Sept 30, even after recent price rises. “The quality, quantity and variety of viewing remains healthy and it drives our business model,” he said, adding that view hours in India grew 24 per cent in the third quarter.
The comments came as Netflix reported third-quarter revenue of US$12.87 billion, up 11.8 per cent year on year and in line with Wall Street estimates, but its slowest growth rate in three years. Net income rose to US$3.66 billion from US$2.55 billion a year earlier, or 87 cents a share, slightly ahead of the 82 cents analysts expected. The company forecast fourth-quarter revenue of US$13.4 billion, below earlier expectations of US$13.5 billion, and cut its full-year advertising revenue outlook to about US$2.7 billion from US$3 billion.
Netflix said its projected fourth-quarter operating margin of 26 per cent includes a 120-basis-point hit from layoff-related costs. “These organisational changes enable us to continue to aggressively invest in high-impact areas to improve our service, and drive growth and innovation,” management wrote in its letter to shareholders. Analysts at Jefferies estimate that average monthly viewing time per member globally has fallen from 66 hours in the first half of 2023 to about 49 hours in the first half of 2026.
On Rice, whom he has known for about 15 years, Sarandos said the former chairman of Walt Disney Television “brings expertise in both art and commerce, television and film”, adding: “Most importantly, Peter Rice understands talent relations, and in a competitive market, creative talent have choices of where they want to work.” Rice was ousted from Disney by then-chief executive Bob Chapek in 2022.
Chief financial officer Spencer Neumann said Netflix was not overly dependent on any single title or region. Looking ahead, the company plans to launch its ad-supported tier in 15 new countries in 2027, starting in March with nine European markets, Colombia, Peru and New Zealand.
The original Variety post can be viewed on X: https://x.com/Variety/status/2112705474067874075.
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