The Netflix Ax Is Coming as Stock Languishes

For weeks there’s been a steady drumbeat near the halls of power at Netflix over the question of rightsizing, job cuts and a restructure ahead of its third quarter earnings disclosure on October 20.

While the streaming giant still lords over its rivals in the subscription space and co-chiefs Ted Sarandos and Greg Peters command an annual content spending budget of $20 billion, Wall Street arguably has viewed this as an off year for Netflix.

Once a high-flying tech growth story, the nearly 30-year-old company is now the studio establishment as all the attention and investment has gone to AI bets in public markets. The company also has had to fight off an ever-growing YouTube, which is increasingly becoming the dominant platform on TV screens in addition to its video lead on mobile devices.

With stock down 20 percent year to date, Sarandos and Peters may unveil a shake up that could be geared in part to showing the Street that it’s ready to accelerate growth in the post-Streaming Wars economy. In the last several weeks, multiple journalists have been hearing that cuts could be in the 5 percent range, or more, at the company.

The Hollywood Reporter has been hearing the same from sources about upcoming belt-tightening, and Sarandos himself has been laying those expectations in public settings as well. The company has 16,000 employees, 10,900 of which are based in the U.S., as of the company’s last 10-K filing in December. A reorganization may be undertaken in the next few months. Netflix declined to comment on Friday.

“Overall, we’re not growing as fast as I want us to, and we’re working on making that move faster,” the co-CEO said at Bloomberg‘s Screentime event on Sept. 30, in a nod to the potential rework to come. He also added, “The business is great and growing fine.”

Netflix regularly cuts staff and rehires, that’s been a principle from founder Reed Hastings he even wrote about in his 2020 book, No Rules Rules: Netflix and the Culture of Reinvention. But these pink slips would mark more of a significant mass restructure should they come to pass.

Layoffs, if strategically executed with a go-forward plan, can sometimes help boost share price and Wall Street has been valuing austerity at the top publicly traded companies for several years now.

The move would be in keeping with layoff season at the other Hollywood majors. Disney, under new CEO Josh D’Amaro, has been in the middle of his first notable round of pink slips while Warner Bros. and Paramount will soon see the ax fall as well as the Skydance team searches for $6 billion in synergies.