Reed Hastings Sells $1.1 Billion Worth of Netflix Stock

Netflix co-founder and executive chairman Reed Hastings has disposed of 2 million shares, or 40% of his ownership stake, worth a current value of $1.1 billion, according to a regulatory filing.

No explanation was given for the transaction, with media reports suggesting the move was a gift to an unknown beneficiary from the Hastings-Quillin Family Trust. Patty Quillin, a reported documentary film producer and philanthropist, has been married to Hastings since 1991. Following the Jan. 24 filing, Hastings still owns more than 2.9 million Netflix shares worth $1.7 billion.

The 63-year Hastings, a longtime education activist, and his wife are no strangers to high-profile donations. In 2020, the couple donated a combined $120 million to the United Negro College Fund, Spelman College and Morehouse College in Georgia. In 2022, Hastings and Quillin gave $10 million to Tougaloo College in Mississippi.

Netflix has a market capitalization of more than $245 billion.

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Reed Hastings Buys Majority Stake in Largest North American Ski Resort

Netflix co-founder and chairman Reed Hastings has bought a $100 million majority stake in Powder Mountain, Utah, reportedly the largest ski resort in North America with more than 8,400 acres located an hour north of Salt Lake City International Airport. In April, Hastings acquired a minority stake in the resort.

Powder Mountain, Utah

“This is an investment in what we consider to be the ultimate skier experience,” Hastings said in press release. “My wife Patty and I love this place; we love the untracked powder several days after a storm cycle, we love the vastness of the terrain, and we love the community. We’re looking to accentuate what has always made it special. We’ll do that by making it more easily accessible, by bolstering infrastructure and amenities and by maintaining the uncrowded feel Powder Mountain is known for.”

Hastings intends that his investment will fast-forward the development of ski slopes, Nordic and snowshoe trail routes, snowmobile routes, and electric snow bike courses, among other infrastructure projects.

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In addition to the construction of a new activity hub, dubbed the Launch Pad Yurt to be completed by December, Hastings’ investment will contribute to the rollout of budget-minded $19 nightly lift tickets, and development of 500 of acres of so-called “Don’t Mention It” (DMI) terrain only accessible with a ski guide.

“We are excited to provide a greatly enhanced beginner experience for newcomers to skiing and riding,” said Kevin Mitchell, GM of Powder Mountain, in a statement. “This, combined with our new Nordic and snowshoe trails for non-skiers and newly added guided expert terrain, truly provides a progression of uncrowded experience for everyone at Powder Mountain.”

The resort reportedly has an annual snowfall of more than 500 inches.

Netflix Cancels Live Advertising Upfront Slated for Company-Owned Paris Theater in New York on May 17

Netflix has canceled what would have been it first live programming upfront for advertisers, slated for May 17 at the streamer’s Paris Theater in New York City. Instead, the event, which typically includes the appearance of content stars, will be held virtually.

While the streamer, which last December launched an ad-supported SVOD option, gave no official explanation for the change, media reports suggest the move was done due to planned picket lines by striking Hollywood writers. With much of the issues surrounding the Writers Guild of America’s strike involving higher compensation for streamed content, the labor strife has been unofficially called the “Netflix Strike.”

Ted Sarandos (Shutterstock image)

With a $17 billion annual content war chest, the SVOD pioneer and world’s largest subscription streaming video platform is an easy target for strikers. At the same time, Netflix has become sensitive to the strike, with co-CEO Ted Sarandos canceling a planned appearance at next week’s PEN America Gala (also in New York), where he was to receive the Visionary Award from the literary group.

“Given the threat to disrupt this wonderful evening, I thought it was best to pull out so as not to distract from the important work that PEN America does for writers and journalists, as well as the celebration of my friend and personal hero Lorne Michaels. I hope the evening is a great success,” Sarandos said in a statement.

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In a statement, PEN said it admires “Sarandos’ singular work translating literature to artful presentation on screen, and his stalwart defense of free expression and satire.”

“As a writers organization, we have been following recent events closely and understand his decision,” PEN said.

With content writers alleging their profession is being marginalized into a gig economy, adding fuel to the fire was last month’s Netflix SEC disclosure that co-founder/executive chairman Reed Hastings and Sarandos saw their total 2022 financial compensation increase to $51 million and $50.3 million, respectively.

Reed Hastings in 2010: Netflix to Deliver Last DVD Movie Rental in 2030

Netflix plans to stop delivering by-mail disc rentals on Sept. 29, about seven years earlier than it previously disclosed to Wall Street.

Thirteen years ago, Netflix was aggressively pursuing subscription streaming VOD while largely sidelining its legacy by-mail disc rental business. About 17 months later in 2011, then CEO Reed Hastings announced the short-lived Qwikster rebranding of its disc rental business —- a decision that would see the company’s stock freefall, and 800,000 subscribers depart.

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But on the streamer’s April 21, 2010, first-quarter fiscal call, Wall Street analyst Mario Cibelli asked whether Netflix still planned to deliver it last DVD rental in 2030 as oft announced.

Hastings, responded, saying he would personally deliver Netflix’s last DVD in 2030, adding he thought management’s deadline for packaged media was accurate.

“Our DVD shipments are continuing to climb throughout the country, even in the Bay Area where you see 24% of households subscribing to Netflix and our DVD shipments,” Hastings told Cibelli on the call, an excerpt of which Cibelli posted on Twitter. “DVD, Blu-ray Disc combined, are continuing to grow, so DVDs got a lot of legs here and 2030 is still the target.”

Fast-forward to April 23, 2023, and Hastings still plans to hand deliver that last DVD rental.

“Remind me to deliver you an honorary last DVD in 2030, Mario! You deserve it for your keen tracking ability,” Hastings, who is now executive chairman after relinquishing his co-CEO position to Greg Peters, wrote in a post.

No word yet who, or if anyone, will deliver Netflix’s actual last disc rental in five months.


Netflix Indifference to Disc Rental Not Surprising

NEWS ANALYSIS — Netflix’s pending (Sept. 29) exit from the by-mail disc rental business it created 25 years ago underscores the company’s longtime indifference to packaged media as it focused on creating a business model (SVOD) that would turn the entertainment industry on its ear.

Netflix, years ago, stopped reporting by-mail subscriber numbers, opting not to include hundreds of millions of dollars of annual “immaterial” revenue in its fiscal reports. That the company devoted almost 175 words to its disc rental swansong at the end of the first quarter shareholder letter is an accomplishment in itself. It’s more attention to disc than Netflix has expressed in more than a decade.

“We feel so privileged to have been able to share movie nights with our DVD members for so long, so proud of what our employees have achieved and excited to continue pleasing entertainment fans for many more decades to come,” co-CEOs Ted Sarandos, Greg Peters and CFO Spence Neumann wrote in a letter. “Thanks to all our employees over the years that worked so hard to build the booster rocket that got streaming to a leading position.”

Indeed, as Netflix was establishing a global streaming empire, disc rentals helped pay for it. The service delivered its 1 billionth DVD rental in 2007 with little fanfare. Five years later, the business was operating under a separate banner — — and office building.

That transpired quietly after co-founder/CEO Reed Hastings — in a blog post from his hot tub in Santa Cruz in September 2011 — infamously announced plans to split and rename the disc business (“Qwikster”) from streaming, in addition to implementing a price hike.

While the price hike stuck, the Qwikster idea was canned after three weeks, with Hastings issuing repeated apologies as the service lost 800,000 subscribers and the company’s stock price plummeted.

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“I think they should have been paying much more attention to [disc] because that was their customer base,” Stuart Skorman, a Bay Area entrepreneur who worked with Netflix, told The New York Times at the time. “That’s what made them special.”

But that was a business lifetime ago. Despite generating $32 million in disc rental revenue in the first 90 days of 2023, Netflix is finally pulling the plug — after reportedly delivering 5.2 billion discs. That the company wouldn’t respond to overtures from Redbox owner Chicken Soup for the Soul Entertainment to buy the business suggests either enduring sentimentality and/or arrogance to legacy.

Netflix long ago gave the cold shoulder to packaged media, the by-mail disc rental business model that created the company, and co-CEO Ted Sarandos’ history as a former video store manager in Phoenix,  possibly drew a line in the sand that precludes any third party sale.

But business is business, and Netflix has shown over the years it isn’t shy from making tough decisions. And selling a money-losing subsidiary ($355,000 a day renting discs is apparently unprofitable) to a willing buyer would seem a no-brainer.

Michael Pachter, media analyst with Wedbush Securities in Los Angeles, believes selling the disc rental business would enable Netflix to cash out one last time on a segment that has been margin positive for a long time.

The longtime Netflix bear turned bull has sung the streamer’s praise more recently as the company ups its annual free cash flows. And selling a DVD business that isn’t officially included in the financials would greatly add to that.

“Hard to understand why they would be so disinterested in selling,” Pachter said.

All Eyes on Netflix’s First Quarterly Fiscal Report in the Post-Reed Hastings Era

NEWS ANALYSIS — There will be a familiar face missing today when Netflix holds its quarterly fiscal webcast after the market close: co-founder Reed Hastings, who stepped down at the end of 2022 from co-CEO duties to become executive chairman. That leaves promoted co-CEO Greg Peters, along with co-CEO Ted Sarandos and CFO Spencer Neumann to handle the play-by-play.

As has been a trend since the inception of the subscription streaming video market, what happens with Netflix has an immediate impact across the media landscape. When the streamer last year posted an unexpected net sub loss, the company’s stock tanked nearly 50% and Wall Street suddenly pivoted from lauding streaming to scrutinizing mushrooming costs associated with creating original content for direct-to-consumer eyeballs.

Netflix (wisely) will no longer make subscriber growth projections, instead focusing on revenue ($8.17 billion) and net income ($1.27 billion). The latter remains an interesting data point given considering Netflix’s rivals continue to hemorrhage money on direct-to-streaming with lofty promises of fiscal income by next year.

Regardless, Wall Street remains relatively bullish on Netflix, contending the service will see declines in share earnings on top of a slight increase in revenue. The Street will be looking for further color on Netflix’s ad-supported subscription plan and the impact of a crackdown on password sharing

“We’re still very early in both, but any commentary on conversion, churn and/or adoption of the new offerings is more important to our thesis than 1Q results,” Wall Street investment bank Jefferies wrote in a recent client note.

Wedbush Securities media analyst Michael Pachter isn’t afraid to project subscriber data, contending the streamer will add 3.5 million global net subscribers in the first quarter, which includes 500,000 new North American subs, 1.5 million in EMEA, 1 million in Asia Pacific, and 500,000 in Latin America.

“We think Netflix made a great decision to launch an ad-tier, as [subscriber] growth had stalled in [North America] and was heading toward full market saturation in [Europe, Middle East and Africa],” Pachter wrote in a note to investors. “We … expect this to continue to drive a re-acceleration of subscriber growth.”

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Reed Hastings Says Netflix Senior Management Transition Had Been 10 Years in the Works

Netflix co-founder/co-CEO Reed Hastings’ Jan. 19 announcement that he is stepping sideways into the newly created executive chairmanship position, with former chief operating officer Greg Peters assuming the co-CEO position alongside co-CEO Ted Sarandos, had been in motion for about 10 years, Hastings said on the fiscal webcast.

Ted Sarandos on Jan. 19 fiscal webcast

Hastings hailed Netflix’s first 25+ years as “a good start” from DVD by-mail rental pioneer to streaming giant with more than 231 million global subscribers — and the only subscription streaming service generating a profit ($55 million in fiscal 2022).

“We dream of the whole world finding their entertainment on Netflix,” Hasting said. “And the three of us have been working together for 15 years trying to figure out how to get through this issue, that issue, and how to grow. I couldn’t be happier to complete our succession process.”

Hastings, who has had one foot out the senior management door since naming Sarandos his co-CEO in April 2020, said the succession process began about 10 years ago in discussions with the board.

Newly appointed co-CEO Greg Peters on fiscal webcast

When Sarandos was upped to co-CEO, Hastings cautioned that he would remain with the company he co-started in 1997 with Marc Randolph — Netflix’s first CEO —  for at least another 10 years.

Hastings said Sarandos and Peters have been leading Netflix “more and more” and today’s announcement was a formal acknowledgment in how the company has been led over the past several quarters.

“It’s just a good feeling,” he said, adding that as executive chairman, he would be available to help Sarandos and Peters going forward. “But, it’s really theirs to lead and to use that energy and intensity that we have been doing.”

He said Peters and Sarandos are “ready” for the challenge, “so, I couldn’t be happier.”

Sarandos said Hastings would remain a role model, mentor and friend going forward.

“In 22+ years, Reed has positively changed my life in everyway manageable,” Sarandos said, adding that he is leaving “some big shoes for Greg and I to fill. Fortunately, we have four feet to do it with.”

Netflix’s Reed Hastings Credits Hulu for Advancing Ad-Supported SVOD Business Model

Reed Hastings, co-founder and co-CEO of Netflix, now wishes the streamer had launched an ad-supported plan years ago. Speaking Nov. 30 at the New York Times’ Dealbook confab in New York City, Hastings said the service has two mantras: customer satisfaction and strong operating income. He said senior management (i.e., himself) failed to realize growing consumer demand for a lower-priced ad-supported plan.

“You’re right to say I didn’t believe in the ad-supported tactic for us,” he said. “And I was wrong about that.”

Netflix launched its ad-supported subscription streaming VOD plan on Nov. 3, less than six months after hastily announcing plans to reverse more than a decade of steadfastly refusing to sell commercials to subscribers in the form of a lower-priced service option.

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Hastings contends the proof that an ad-supported SVOD option could work was right in front of him all along. The executive said Hulu, which launched an ad-supported option on day one in 2007, proved that a streaming service could operate an AVOD service at scale, offering consumers lower prices, which would translate into a better overall business model.

In fact, it wasn’t until Netflix missed its first-quarter subscriber growth projection at the end of March this year that Hastings told investors about a plans to launch an AVOD tier in early 2023. With Disney planning to launch a lower priced ad-supported option for Disney+ on Dec. 8, Netflix expedited the launch of its plan.

“So we did switch on that, and credit to Hulu and [former CEO] Jason Kilar for figuring that out,” Hastings said, adding that he failed to see that larger percentages of the coveted 18-49-year-old demo were transitioning to connected televisions and away from linear TV — with advertisers in pursuit.

“We didn’t have to steal away the advertising revenue; in fact, it was pouring into connected TV,” he said. “And I wish we had flipped a few years earlier on it, but we’ll catch up, and in a couple of years we won’t remember when we started it.”

Reed Hastings: ‘Thank God We’re Done With Shrinking Quarters!’

When Netflix reported better-than-expected subscriber growth worldwide (2.4 million new subs versus 1 million projection) for the fiscal period ended Sept. 30, including a net gain of 100,000 subs in North America, nobody was happier than co-founder/co-CEO Reed Hastings.

“Thank God we’re done with shrinking quarters,” Hastings said on the earnings webcast. “It’s a big deal to go back to the positivity.”

Hastings said he hopes the service will act on the sub-growth momentum throughout the company, including content, marketing, lowering ad-supported pricing, adding that negative foreign exchange rates continued to hit the bottom line, a reality that wasn’t going away and Netflix had little control over.

“That’s a huge hit and F/X isn’t going to go away, but other than that, all the stars are lining up very well for us,” he said.

Netflix’s rollercoaster 2022 fiscal year has been marred by subscriber losses and Wall Street punishing the company’s shares in response — the stock was down $50 billion in market valuation in April.

But despite the good news, CFO Spencer Neumann said the churn rate, or subscribers not renewing service, remained high and similar to Q2 levels — but not enough to offset net sub adds.

In addition to adding 100,000 subs in North America, Netflix added 570,000 subs in Europe, Middle East and Africa, more than 310,000 net new subs in Latin America, and 1.43 million new subs in Asia-Pacific.

“We’re off to a nice start,” Neumann said.

Netflix said it would no longer provide subscriber guidance, starting with the first quarter of 2023. It does expect to add 4.5 million new subs worldwide in the current fourth quarter, ending Dec. 31.

Netflix Signs Up for BARB Media Measurement in the U.K.

Netflix has agreed to allow the Broadcasters Audience Research Board (BARB) to report on the streamer’s daily viewership across the United Kingdom.

Beginning Nov. 1, BARB will report Netflix viewing daily, covering both the service’s reach and program viewership to its clients. BARB currently reports viewing for more than 300 pay-TV channels, broadcast video-on-demand (BVOD) and (AVOD/SVOD) services in the U.K.

Netflix viewing data will be available to all BARB clients on the morning of Nov. 2 through existing viewing analysis software and data-processing bureau.

“Back in 2019, at the RTS conference in Cambridge, I welcomed the idea of Netflix audiences being measured independently,” Reed Hastings, co-founder/co-CEO of Netflix, said in a statement. “We’ve kept in touch with BARB since then and are pleased to make a commitment to its trusted measurement of how people watch television in the U.K.”

Through 2022, U.K. broadcasters’ linear channels and on-demand services have accounted for two-thirds of all identified viewing, while SVOD/AVOD services comprise about one-sixth of all viewing. The average daily viewing time to broadcasters’ services was 159 minutes in September 2022, and the average for SVOD/AVOD services was 36 minutes per day.

“We took a big step forward last year when we started reporting audiences to streaming services,” said Justin Sampson, CEO of BARB. “Netflix’s commitment to BARB sends a clear signal that what we’re doing is valuable to new and established players in the market.”

Netflix has nearly 14 million subscribers in the U.K.

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