Ted Sarandos, Bob Iger Among Executives on California Gov.’s Task Force Seeking $1 Trillion in Congressional Virus Relief for Local Governments

Netflix CCO Ted Sarandos and Disney executive chairman Bob Iger have joined a group of more than 90 California business leaders calling on Congress to approve $1 trillion in coronavirus fiscal relief for all states and local governments.

Sarandos and Iger are members of California Gov. Gavin Newsom’s Task Force on Business & Jobs Recovery organized to deal with the economic, environmental and social fallout from the pandemic.

In a May 15 letter to House and Senate leaders Rep. Nancy Pelosi (D-CA) and Sen. Mitch McConnell (R-KY), the task force said COVID-19 has “fundamentally” changed how business and organizations operate and are managed.

“The worst of the economic impact is likely still to come,” read the letter.

The group said successful re-opening of state and local economies relies on building confidence among consumers that it is safe to shop and greater certainty for workers that the services they rely on to do their jobs will remain in place.

“Without that, we will be a re-opened economy in name only,” they wrote.

The group said it stands with business leaders throughout the nation, from both sides of the aisle, who said the funds would protect core government services like public health, public safety, public education and helping people get back to work.

“This funding will help our states and cities — and America’s economy — come out of this crisis stronger and more resilient,” they wrote.

The letter came on the day the Democrat-controlled House approved a $3 trillion relief bill, which included $1 trillion in states aid. The Republican-controlled Senate is not expected to pass the bill.

Netflix Sets Up $100 Million Coronavirus Relief Fund

Netflix has taken another proactive step during the growing global coronavirus pandemic. The SVOD pioneer March 20 disclosed it is creating a $100 million relief fund for people in the entertainment business waylaid by the epidemic.

CCO Ted Sarandos, in a blog post, said $15 million would go to third parties and nonprofits providing emergency relief to out-of-work crew, cast, electricians, carpenters and drivers  — many of whom are paid hourly wages and work on a project-to-project basis — in the countries where Netflix has large production facilities.

“This community has supported Netflix through the good times, and we want to help them through these hard times, especially while governments are still figuring out what economic support they will provide.” Sarandos wrote. “So we’ve created a $100 million fund to help with hardship in the creative community.”

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He said most of the monies will go toward support for the hardest hit workers on its own productions. This is in addition to the two weeks pay Netflix has already committed to the crew and cast on productions forced into suspension last week.

“We’re in the process of working out exactly what this means, production by production,” Sarandos wrote.

Netflix is also donating $1 million each to the SAG-AFTRA COVID-19 Disaster Fund, the Motion Picture and Television Fund and the Actors Fund Emergency Assistance in the U.S., and $1 million between the AFC and Fondation des Artistes.

In other regions, including Europe, Latin America and Asia where it has a big production presence, the streamer is working with existing industry organizations to create similar creative community emergency relief efforts.

“What’s happening is unprecedented. We are only as strong as the people we work with and Netflix is fortunate to be able to help those hardest hit in our industry through this challenging time,” Sarandos wrote.

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Netflix earlier this week announced it would limit content streaming to standard definition throughout Europe in an effort to reduce by 25% streaming data bit demandsNetflix from local broadband networks.

 

Sarandos: Awards, Movie Marketing Drives Netflix Viewership

Netflix is again spending millions marketing select movies (The Irishman, Marriage Story, etc.) for industry acclaim, including the upcoming Academy Awards on Feb. 9.

While Irishman has generated much of the media attention and nominations, Marriage Story has taken home the awards hardware, notably for supporting actress Laura Dern.

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Speaking on a pre-recorded fiscal interview Jan. 21, chief content officer Ted Sarandos wouldn’t disclose how much the company is spending on awards marketing, but suffice to say the dollar amount has grown in recent years.

Netflix generated 34 Golden Globes Awards nominations, including 17 for movies. Netflix earned 24 nominations for the 92nd Oscars — topping all other studios and media companies. Martin Scorsese’s Irishman generated 10 noms, Marriage Story, 6, The Two Popes, 3, and Klaus is up for best animated feature film.

Netflix spent $2 billion marketing movies and TV shows in 2018, which included industry awards. The service spent $15 billion on original content in 2019.

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“It’s how we’re choosing to bring the incremental spending to the table in terms of the bigger breadth and scale of films,” Sarandos said, adding that the marketing increase hasn’t been at the expense of original TV series, including adding 130 local language series worldwide.

“So to me, I look at [marketing spend] as the growth — the benefit to the business is the growth [in viewership],” he said.

 

Netflix Brass Doubles Down on Indifference to Pending SVOD Competition

With Disney and Apple just weeks away from launching branded subscription streaming video services, Netflix remains defiant to the pending competition, which includes service launches from WarnerMedia (HBO Max) and NBCUniversal (Peacock) early next year.

Speaking on the company’s Oct. 16 fiscal earnings webcast, CCO Ted Sarandos walked back any apparent corporate weakness regarding comments CEO Reed Hastings made in the United Kingdom last month about a whole new world in over-the-top video awaiting come November.

“I think I got the subtlety of the brave — the whole new world Aladdin reference,” Sarandos quipped. “Everyone else took it pretty literal.”

Many on Wall Street had taken Hastings’ comment to suggest Netflix was concerned, especially after HBO Max and Peacock took away Netflix streaming rights to popular reruns of “Seinfeld” and “The Office,” respectively.

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“From when we began in [2007] streaming, Hulu and YouTube and Amazon Prime Video were all in the market,” Hastings said. “All four of us have been competing heavily, including with linear TV, for the last 12 years. So fundamentally, there’s not a big change here.”

Hastings said he found it “interesting” to see both Apple and Disney launching services in the same week after 12 years of not showing much interest in SVOD.

“I was being a little playful with a whole new world in the sense of the drama of it coming,” Hastings added. “But fundamentally, it’s more of the same, and Disney is going to be a great competitor. Apple is just beginning, but they’ll probably have some great shows, too.”

Indeed, until just recently, Disney exclusively licensed original movies and rights to create original Marvel TV series to Netflix.

The Netflix co-founder reiterated that the SVOD market remains more in competition with linear TV than within its market. He said OTT video is still a relatively small player compared to broadcast TV.

“So, just like in the [shareholder] letter … [writing about] multiple cable networks over the last 30 years not really competing with each other fundamentally but competing with broadcast TV, I think it’s the same kind of dynamic here [with streaming video],” Hastings said.

 

Post Subscriber Hiccup, Netflix Piles Praise … on HBO

After disappointing Q2 subscriber growth numbers, Netflix senior management on the fiscal webcast took the high road deflecting the subscription streaming service’s first domestic quarterly decline (since 2011) while adding only half of projected international subs.

CEO Reed Hastings said it might be easy to “over-interpret” the lack of sub growth but that under similar circumstances three years ago  management also could not be confident of any specific reason for the slowdown.

“Then, we were $2 billion in quarterly revenue,” Hasting said. “Now, we’re $5 billion. We’re just executing forward and trying to do the best forecast we can.”

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When Netflix launched streaming video 12 years ago, there were three competitors (Hulu, Amazon and YouTube). Now, media giants NBC Universal, Disney, Apple and WarnerMedia are launching high-profile competitors – and taking their Netflix-licensed content with them.

Regardless, Hastings said Netflix remains in excellent position as the No.1 SVOD service in the world with more than 151 million subs.

“If investors believe in Internet television … then our position in that market is very strong,” he said.

Chief content officer Ted Sarandos said the service continues to focus on creating original content developed in local markets with global appeal.

He said recent releases “How to Sell Drugs Online” (Germany), “The Rain” season 2 from Denmark and “Quicksand” from Sweden, have generated upwards of 15 million combined viewers globally.

Netflix is expecting a similar reception to the second season of India’s “Sacred Games,” which launches this quarter.

“What’s been amazing is [that the shows have] been deeply relevant in the home country, traveled the region very well and found global audiences,” Sarandos said.

With WarnerMedia set to launch SVOD competitor “HBO Max” in early 2020, it was interesting to hear Netflix brass sing praise for the venerable premium pay-TV channel. Indeed, Hastings said most Netflix employees subscribe to HBO.

“We love the content they do and that spurs us on to want to be even better,” he said. “So, it’s a great competition that helps grow the industry.”

Sarandos congratulated HBO for re-taking the Primetime Emmy Award nominations title, which Netflix claimed from the network for the first time in 2018 after 17 years.

“They continue to be the gold standard that we chase, and we’re really thrilled for them,” Sarandos said.

Netflix Names New Chief Marketing Officer

Netflix July 12 announced that Jackie Lee-Joe has been named chief marketing officer, replacing Kelly Bennett, who retired earlier this year.

Lee-Joe has served as CMO of BBC Studios, part of the British Broadcasting Corp., since 2015.

“Jackie is a truly original thinker with a wealth of global experience – making her the perfect fit as our next Chief Marketing Officer,” Ted Sarandos, chief content officer, said in a statement.

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A graduate of the University of Sydney and the University of New South Wales, Jackie joined the BBC in 2015 from Skype, where she was global director for audience, entertainment marketing & broadcast media.

She has over 20 years of marketing experience with leading media, technology and telecoms companies including Virgin Mobile, Carphone Warehouse and Orange. Lee-Joe starts in September and will be based in Los Angeles.

Netflix reports second-quarter financials on July 17.

Netflix Leasing Production Space at Pinewood Studios in the U.K.

Netflix reportedly has signed a 10-year lease for production space at the legendary Pinewood Studios in the United Kingdom.

Specifically, the deal includes access to 14-stage studio space, in addition to office and workshops at Pinewood’s Shepperton Studios, according to Deadline.com.

“Shepperton has been synonymous with world class film for nearly a century and it’s an important production hub for the U.K. creative community today,” CCO Ted Sarandos said in a statement. “We’re incredibly proud to be part of that heritage. This investment will ensure that British creators and producers have first rate production facilities and a world stage for their work.”

Earlier this year, Netflix inked deals for facilities in Toronto, on top of previous content production hubs in Madrid, Paris and Amsterdam. The SVOD behemoth is also opening a New York city office.

Marketwatch reports Netflix is also working on projects across Mexico, Spain, Italy, Germany, Brazil, France, Turkey and the entire Middle East.

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International productions satisfy local quotas in addition to supporting rapidly expanding OTT markets in Germany, Spain, France and India compared with the maturing U.S. market.

Netflix reports second-quarter (ended June 30) financial results July 17.

Netflix Reportedly Eyeing Content Budget Restraint

With Netflix’s fiscal second-quarter ended June 30, the SVOD pioneer reportedly is re-evaluating its prolific content spending.

The service, which ended Q1 with $18.9 billion in third-party content obligations, spent more than $12 billion on original content in 2018 — a fiscal largess senior management is now scrutinizing.

CCO Ted Sarandos in June reportedly held a meeting with mid-level managers with a revised mandate that spending on original content should be commensurate with viewership — especially among new subscribers and long-time inactive members, according to The Information, which cited people at the meeting.

Netflix heretofore has eschewed spending restraint in favor of content’s social media buzz and establishing industry legitimacy.

“They are the leading game in town and were probably overspending relative to what they need,” analyst Michael Nathanson with MoffettNathanson told the website. “Now that they are in a strong position, they probably want to allocate more of that spending overseas.”

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The service in recent years has blown up industry norms outspending/bidding over-the-top competitors and traditional pay-TV players for content and exclusive license agreements.

With domestic sub growth maturing and a bevy of pending OTT video services launching from deep-pocket competitors such as Apple, Disney, WarnerMedia and NBC Universal, among others, Netflix now wants original programming to pay for itself — a challenge for a business model that shuns advertising, the theatrical window and transactional VOD.

Sarandos, according to The Information, was at odds with the reported $115 million spent on Triple Frontier, the original action movie with Ben Affleck and Charlie Hunnam (“Sons of Anarchy”) that apparently didn’t resonate with subscribers — or the service’s bottom line.

In fiscal 2018, Netflix generated negative cash flow of $3 billion on revenue of $16 billion — a figure projected to increase to $3.5 billion in fiscal 2019 — much of it due to content spending.

“There’s been no change to our content budgets, nor any big shifts in the sorts of projects we’re investing in, or the way we greenlight them,” said a Netflix spokesperson.

Meanwhile, pending original movie The Irishman, from director Martin Scorsese has a reported budget of $150 million. With Netflix eyeing the mob thriller for next year’s industry awards, the service will have to compromise on its concurrent theatrical/streaming release mandate, says Michael Pachter with Wedbush Securities in Los Angeles.

“We expect Netflix and exhibitors to reach an accommodation where there will be a shortened window in exchange for lower film rent,” Pachter wrote in a July 1 note.

A typical film earns 83% of its box office within four weeks, and 96% within 60 days, which Pachter believes could soften exhibitors’ revenue loss to around 3% as the result of a shortened theatrical window to appease Netflix’s business model.

“We think that if studios or platforms like Netflix are willing to trade film rent for an earlier window, the negative impact on exhibition would be limited particularly for films well-suited for the big screen,” Pachter wrote. “The Irishman may fit the bill.”

Netflix reports Q2 fiscal results July 17.

Disney to Join Growing Hollywood Bandwagon Ceasing Operations in Georgia Should Anti-Abortion Ban Take Effect

The Walt Disney Co. could join Netflix and other Hollywood actors and production companies who say they would stop working in Georgia should a recently signed anti-abortion law take effect on Jan. 1, 2020.

Speaking to Reuters, Disney CEO Bob Iger was asked if Disney would continue to make movies (Black Panther) and TV shows in the state should statewide legislation outlawing a woman to abort her pregnancy after six weeks become law. Georgia currently bans abortions after 20 weeks.

Georgia Gov. Brian Kemp signed the legislation on May 8.

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“I think many people who work for us will not want to work [in Georgia] and we have to heed their wishes in that regard,” Iger said. “Right now we’re watching it very carefully. I don’t see how it’s practical for us to continue to shoot there.”

Disney’s possible departure from Georgia could be a major blow to the state’s lucrative film business, which employs thousands and generates billions in annual revenue by offering studios generous tax incentives.

In addition to Panther, Marvel Studios Avengers: Endgame, Captain America: Civil War and Guardians of the Galaxy 2, among others, filmed in the Peach state.

Disney’s possible pullout of Georgia is reminiscent of a similar ploy when Georgia lawmakers attempted to ban same-sex marriage within the state.

Disney came out against the proposed legislation, claiming it was an affront to personal civil liberty.

“Disney and Marvel are inclusive companies, and although we have had great experiences filming in Georgia, we will plan to take our business elsewhere should any legislation allowing discriminatory practices be signed into state law,” a spokesperson said at the time.

Then Georgia Gov. Nathan Deal quietly vetoed the legislation.

Netflix Seeks New $2 Billion Bond Debt as Executive Compensation Balloons

With Netflix continuing to exponentially outspend ($12 billion in 2018) its over-the-top video rivals on original content and other corporate needs, the SVOD pioneer April 23 disclosed it is seeking an additional $2 billion in long-term debt financing.

The new bonds — Netflix’s first in six months — would be carried out in a two-part deal with an undisclosed interest rate and maturity date.

Netflix ended first quarter (ended March 31) with more than $10.3 billion in long-term debt – up 58.5% from long-term debt of $6.5 billion in the previous-year period.

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The SVOD behemoth could theoretically ask co-founder and CEO Reed Hastings for the funds. The 58-year-old Hastings ended the fiscal period with more than 10 million outstanding Netflix shares, worth more than $3.7 billion.

Separately, Hastings saw his total 2018 compensation increase 48% to $36.1 million from $24.4 million in 2017, according to a regulatory filing.

Chief content officer Ted Sarandos saw his compensation increase 32% to $29.6 million from $22.4 million in 2017. The executive ended the period with more than 490,000 Netflix shares worth $184.2 million.

Chief product officer Greg Peters received $12.5 million in compensation – up from $8.6 million in 2017; excluding $89 million in stock holdings.

Former CFO David Wells earned $5.4 million from $4.5 million, excluding $73.5 million in stock.

Finally, chief marketing officer Kelly Bennett, who is leaving the company, earned more than $7.3 million in 2018. He will exit the company with nearly $20 million in Netflix stock.