A day after Netflix co-CEOs Ted Sarandos and Greg Peters faced anxious investors on the company’s Q3 earnings call after reporting mixed financial results, the duo on Wednesday faced anxious staffers at a town hall meeting after laying off 1,000 and shaking up the executive ranks by replacing Chief Content Officer Bela Bajaria with Peter Rice and also ousting head of Film Dan Lin.
The one-two punch of the layoffs on Wednesday, followed by the Bajaria exit on Thursday, which Netflix employees found out about from the press before the news could be communicated internally, was reportedly brought up at the town hall meeting, with Peters indicating job cuts were over for the foreseeable future.
Like on the earnings call the day before, Sarandos touted incoming CCO Rice, who we hear was not at today’s town hall as he officially starts next week.
In his absence, Sarandos spoke enthusiastically about Rice’s background, echoing his comments on the earning call.
“He’s one of the really rare people in the industry who’s led TV networks, movie studios, streaming services, is creative instinct and his business acumen are remarkable. He’s really an at-scale quality and volume operator, and he does it across every imaginable form of entertainment, network, prestige cable, streaming, theatrical and TV films and live sports,” Sarandos said Tuesday, making a point to stress twice that Rice’s background extends beyond film and TV — areas he is mostly known for through his stints as President of Fox Searchlight Pictures during the era of Slumdog Millionaire and Little Miss Sunshine, CEO of Fox Networks Group and Chairman of Walt Disney Television.
That general perception led to some comments following Rice’s appointment last week about him coming from traditional media to the largest streamer without streaming experience.
While it is not extensive, Rice does have some streaming background, which is more extensive than Bajaria’s when she originally joined Netflix, Zack Van Amburg and Jamie Erlicht’s when they took over Apple TV, and Jennifer Salke’s when she took the reins of Amazon MGM Studios.
Rice spent time on the Hulu board. And, for almost three years, from 2019 when his top lieutenant at the time (and eventual successor) Dana Walden took oversight of Hulu Originals until his 2022 ouster, he also signed off on greenlight decisions for a string of buzzy Hulu series such as Only Murders in the Building, Dopesick, The Dropout and The Great. In his role, he also worked with FX topper John Landgraf on transitioning the cable brand to streaming with viral series like The Bear and backed risky big-budget bets that became streaming hits in FX’s Shōgun and Disney+’s Percy Jackson, while also using his Searchlight connections to get the Summer of Soul documentary on Hulu ahead of its ahead of its awards run capped by an Oscar win.
Even if Rice didn’t have streaming experience, his hire has still been cheered by producers and talent reps over his creative credentials and Hollywood relationships. The latter has become a top talking point for Sarandos when explaining the reason for the executive change.
“Most importantly, Peter Rice understands talent relations,” he said on the earnings call Tuesday and reiterated again at the town hall. Similar to the reaction of those watching the earnings webcast, people attending the town hall perceived the comments as praise for Rice but also a slight to Bajaria and her talent relations, though she was thanked for her 10 years at Netflix both on the call at and the town hall, I hear.
Attendees of the town hall also got the impression that concerns over the prospects of Netflix’s current pipeline producing a massive hit may have contributed to the regime change, with Sarandos suggesting on the call that he expects Rice to put his stamp and “have an impact on those projects that are in the works even in the short term.”
“I know that we could do better, especially in the U.S.,” Sarandos said Tuesday.
At both forums, he spoke about Netflix’s “business flywheel” fundamentally working but in need of better execution, including refocusing on making shows that can work globally.
The reset comes amid a major stock slide and flashing red light on Wall Street as engagement growth has slowed amid “really solid doubles and triples” but no home runs this year, as Sarandos acknowledged Tuesday.
It may include going back to basics.
During the town hall, Sarandos reportedly spoke about getting back to “member joy,” which had been a key part of Netflix’s corporate philosophy and so important to co-founder Reed Hastings, he listed it as one of his biggest contributions to the company when he left earlier this year.
Echoing that at the town hall, Sarandos stressed the importance of members and how that should inform everything they do, I hear.