Netflix names Sarandos coCEO
Netflix announced a significant leadership change Thursday, appointing Ted Sarandos, the content chief, as its coCEO alongside Reed Hastings.
“I am excited to announce that we have appointed Ted Sarandos to be Netflix coCEO with me and also elected him to our board of directors,” Hastings said in a statement. Sarandos, 55, will continue as head of content.
The change in many ways formalizes Sarandos’ role in the company. His compensation for the past few years
Netflix’s Ted Sarandos appears at a 2019 Vanity Fair Oscar Party in Beverly Hills. Netflix has promoted Sarandos, its content chief, to become its coCEO, with Reed Hastings.
has been equal to that of Hastings — each received about $30 million in compensation in 2019 — and he has often been the face of Netflix at public events.
Sarandos said he was originally skeptical of Netflix when he was approached to join the company 20 years ago but agreed to come aboard because of the “persistence” of Hastings. “I’m excited and honored to have been appointed coCEO of Netflix,” he said in a statement.
The announcement of the promotion came on a day when the Los Gatos
streaming service reported a surge of 10.1 million new customers in its secondquarter results, extending the gains it made the first three months of the year, when the coronavirus pandemic prompted lockdowns across the globe.
The company had forecast the addition of 7.5 million subscribers, and Goldman Sachs predicted 12.5 million in a note last week. It’s likely the rapid growth is a result of more people choosing to subscribe because of stayathome restrictions.
Indeed, Netflix expects a much weaker performance in the current quarter and forecast the addition of 2.5 million new subscribers. Investors sold off the stock on that prediction, sending the company’s shares down more than 6% Friday.
Netflix reported that it now had 192.95 million customers worldwide and about 66 million in the United States. That puts the service closer to the magical 300 million figure, a loose measure of where investors think Netflix could top out.
Netflix found its early success by mailing DVDs to subscribers in red envelopes as it took on the oncemighty Blockbuster. In its next phase, it transformed itself into a streaming giant mainly by licensing old movies and shows.
In recent years, it has become one of the industry’s most prolific sources of film and TV production. Sarandos now moves easily within Hollywood’s circles of power, brokering bigbudget projects with Martin Scorsese, Will Smith, Shonda Rhimes, Ryan Murphy, Sandra Bullock and Adam Sandler. In short, the company has become more dependent on Sarandos’ domain: original content.
Netflix on Thursday also announced that it had promoted Greg Peters, head of the company’s product group, to chief operating officer, a move that could help Sarandos devote more time to content production.
Hastings will remain chairman. “In terms of the daytoday running of Netflix, I do not expect much to change,” he said. He added that the leadership moves “are part of a long process of succession planning.”
In a call with investors Thursday, Hastings said he is not going anywhere. “To be totally clear, I’m in for a decade,” he said. He repeated himself for emphasis: “So let me be very clear on that. I’m in for a decade.”
Netflix also reported that its slate of new productions was on track last quarter, adding that its planned releases of new shows and films for the rest of the year were “largely intact.”
Blockbusters like “Extraction,” a thriller starring Chris Hemsworth that was released in April, drew 99 million views in its first four weeks, the company said. Last week, Netflix debuted “The Old Guard,” a smart, humane action epic starring Charlize Theron. Fresh programming is crucial to Netflix’s growth because new shows tend to drive new subscriptions.
The company said it would release several new series and films later this quarter, including Season 2 of “The Umbrella Academy” and “Enola Holmes,” a period mystery film with Millie Bobbie Brown, a star of the Netflix hit “Stranger Things,” playing the sister of Sherlock Holmes.
Netflix had to close most of its productions because of the coronavirus, but some shoots are under way. South Korea never shut down, and productions have restarted in Britain, France, Germany, Italy, Japan, Poland and Spain. For 2021, the company expects more of its lineup to be released in the second half of the year.
The shutdowns have temporarily helped Netflix’s cash position because the company spent less than anticipated on productions. It reported nearly $900 million in positive free cash flow this quarter, making it the second consecutive period in which it had more cash come in the door than go out. Netflix now expects to keep its money for the year and could end up with positive free cash flow for 2020, meaning it will finally be profitable on a balancesheet basis.
But that will be shortlived once a full slate of productions is under way. The company said it expected to burn more cash in 2021 as it spends more on content.