It’s another earnings quarter and another new strike knocking at the door, and Netflix Co-CEO Ted Sarandos is responding to the reality of both SAG-AFTRA and WGA on strike while putting on a good face for Wall Street.
During Netflix’s Q2 earnings interview on Wednesday, Sarandos deflected on a pair of questions from Wall Street analyst Jessica Reif Ehrlich about how much content spend from this year would be deferred into next year, as well as at what point content could run out. Instead, Sarandos led off the earnings interview saying that both strikes are “not an outcome that we wanted.” He also shared a story from a personal level saying that his dad was a union electrician who he recalls going on strike.
“We make deals all the time, we are constantly at the table negotiating, with writers, with directors, with actors, with producers, and we very much hoped to reach an agreement by now.” Sarandos said. “It takes an enormous toll on your family, financially and emotionally. So you should know that nobody here, nobody within the AMPTP, and I’m sure nobody at SAG or nobody at the WGA took any of this lightly. But we’ve got a lot of work to do. There are a handful of complicated issues. We’re super committed to getting an agreement as soon as possible, one that’s equitable, and one that enables the industry and everybody in it to move forward into the future.”
When pressed about when content could run out for Netflix, Sarandos said that the company listed some of its upcoming shows and movies in the investor note and referenced his remarks in last quarter’s earnings call about producing “all kinds of content.”
“It’s besides the point. We need to get this strike to get to a conclusion, so we can all move forward,” Sarandos said.
During that last earnings call, Sarandos said that Netflix was prepared “better than most” companies in the event of a writers strike.
“If there is one, we have a large base of upcoming shows and films from around the world, so we can probably serve our members better than most,” he said back in April. “We really don’t want this to happen, but we have to make plans for the worst, so we do have a pretty robust slate of releases to take us into a long time. But just to be clear, we’re at the table, and we’re going to try and get to an equitable solution so there is no strike.”
He’s been right so far. Netflix’s earnings this quarter were strong, with the company adding nearly 6 million global subscribers in the quarter thanks to its “paid sharing” rollout, raising Netflix global subscribers to 238.39 million. Its stock price has also risen dramatically since the prior quarter and could soon hit $500, and as a streamer that plans out its content well in advance, Netflix has gotten by in the nearly three months of the writers strike whereas other linear TV networks have already felt the pinch.
But an actors strike on top of a writers strike is a different animal, and even Netflix will start to sweat if it can’t deliver some of its biggest shows fans want to see on time. The writers strike already shut down production of “Stranger Things 5,” and the actors strike has now shut down any remaining U.S. production, as well as production abroad. The actors strike is also suspending Emmy campaigns and puts a damper on the fall film festivals that Netflix may rely upon to fuel Oscar campaigns.
Netflix, despite beating expectations on earnings and adding nearly six million global subscribers, fell short in revenue benchmarks this quarter, hitting $8.187 billion of revenue from April to June, with quarterly earnings on a per share basis at $3.29. Overall net income was $1.488 billion for the quarter, and Netflix forecasts an even higher profit, $1.58 billion, for the next quarter.
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