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Inside Netflix’s ‘Remarkable’ Move to Bump Ted Sarandos Up to Co-CEO
“It seems Netflix is not only rewriting the rules of content and content distribution, but also the mores of executive treatment,” former ABC Daytime President Brian Frons says
Netflix’s earnings days are never boring — at least in comparison to most other companies. And that was especially true on Thursday, with Netflix appointing Chief Content Officer Ted Sarandos as co-CEO, elevating him to the same level as current chief Reed Hastings.
Analysts responded to the big news by saying it was a rare but appropriate move by entertainment standards that could signal Hastings’ eventual departure from the company he co-founded 23 years ago.
Brian Frons, the former longtime president of ABC Daytime, said Hastings’ willingness to share power and acclaim made this a striking maneuver.
“In the context of Hollywood history, appreciating your number 2 and elevating him to a level where he’s more your partner than your employee is rather unique,” Frons said. “It seems Netflix is not only rewriting the rules of content and content distribution, but also the mores of executive treatment.”
Jukin Media made the same move as Netflix on Thursday, naming Lee Essner as its co-CEO.
Finding a great working relationship between the top two executives at major entertainment companies is usually easier said than done. Most notably, Michael Eisner and Frank Wells notably ran Disney for a decade, but a power struggle immediately followed Wells’ death in 1994. Eisner fired Jeffrey Katzenberg, his studio chief and the man responsible for bringing major hits like “The Lion King” to the silver screen, soon after. Michael Ovitz then resigned from CAA to become president at Disney and serve as Eisner’s second in command. The marriage didn’t last long, with Ovitz growing irritated with the position and ultimately leaving Disney after only 14 months.
“From a historical perspective, I find [Netflix’s co-CEO announcement] remarkable,” Frons added. “In Hollywood, power is not easily shared.”
You wouldn’t know it, though, based on Hastings’ comments. Hastings lauded Sarandos as an “instrumental” part of Netflix’s success, saying that he “drove the revolution” in the company’s content strategy — putting it miles ahead of its streaming competitors in the process.
The announcement, Hastings said, “makes formal what was already informal — that Ted and I share the leadership of Netflix.”
Sarandos’ first hour as co-chief executive got off to a rocky start. Following the announcement, Netflix’s stock sank 10% in after-hours trading, although that is most likely tied to the company falling short of Wall Street’s Q2 earnings estimates and offering lukewarm projections for the second half of 2020.
Still, Sarandos, who will also remain in his role as chief content officer, has the resume for his new role. He has spearheaded the company’s move into original programming — from “House of Cards” up to “Tiger King” — and helped Netflix push to 193 million global subscribers.
There could be a bit more to the deal than simply rewarding Sarandos’ great work, however. It could also be seen as a move to stop his defection to a rival. And analysts also see it as a potential sign Sarandos could eventually take over for Hastings, after more than two decades running the show.
Sarandos is “most likely in-line to takeover from Reed Hastings,” CFRA analyst Tuna Amobi told TheWrap. “It was always expected that at some point Reed would step back, and Ted was always the logical choice. He’s been there since the beginning, and he’s very well regarded by investors. He has very deep relationships with the creative community, and more important, he’s going to maintain his role as chief content officer, which is extremely crucial at this point in time, as the company expands it content slate.”
Hastings seemed to include a hint in a blog post on Thursday, where he shared Chief Product Officer Greg Peters was becoming COO; Hastings said Peters “needs to know every corner of Netflix better than I do today.” But before people had long enough to consider if it was a sign Hastings was leaving sooner rather than later, Hastings said on the company’s earnings call he’s “in for a decade.”
Taking into account Sarandos’ track record, Amobi said Thursday’s decision to make hi co-CEO was an easy one. If Hastings does decide to ride off into the sunset, Amobi said Sarandos “would be a very worthy successor.”
Trey Williams and Tim Baysinger contributed to this report.