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Netflix CEO says company is 'super committed' to ending Hollywood strikes

Netflix (NFLX) co-CEO Ted Sarandos said Wednesday the company is "super committed" to reaching an agreement that would end the double strike in Hollywood that has seen actors join writers on the picket line for the first time since 1960.

Still, the executive said there remains "a lot of work to do" to reach a deal.

"Let me start by making something absolutely clear. These strikes, this strike is not an outcome that we wanted," Sarandos said during the company's quarterly earnings call on Wednesday.

"We make deals all the time. We are constantly at the table negotiating with writers, with directors, with actors and producers with everyone across the industry and we very much hoped to reach an agreement by now."

SAG-AFTRA — the union that represents approximately 160,000 actors, announcers, recording artists, and other media professionals around the world — announced a strike last week after failing to negotiate a deal with the Alliance of Motion Picture and Television Producers (AMPTP), which bargains on behalf of studios.

"Nobody [at Netflix], nobody within AMPTP, and I'm sure nobody at SAG or the WGA took any of this lightly. But we've got a lot of work to do," Sarandos added.

"There are a handful of complicated issues. We're super committed to getting to 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."

Sarandos added the strikes are personal to him given his father was a union electrician.

"That union was very much a part of our lives when I was growing up. I also remember on more than one occasion my dad being out on strike. And I remember that because it takes an enormous toll on your family financially and emotionally," he said.

Netflix reported mixed results on Wednesday, but some profitability metrics like operating margin and free cash flow were better than analysts had expected.

Free cash flow came in at $1.34 billion for the quarter, significantly above consensus estimates for $542 million. Netflix also boosted its full-year free cash flow guidance to $5 billion from $3.5 billion, citing the impact of the Hollywood strikes.

"We expect positive and growing free cash flow trajectory in the years ahead," Netflix CFO Spencer Neumann said on the call, adding there could be some "near-term lumpiness" due to the strikes.

The streamer said it plans to keep content spending flat at $17 billion through 2024.

'Move forward'

According to a new report by Moody's released on Monday, Netflix is among the best-positioned companies in the event of a prolonged work stoppage, along with Comcast (CMCSA), Fox (FOXA), Sony Group (SONY), Amazon (AMZN), and Apple (AAPL).

"Major studios, network owners and streamers that are well-diversified by business, content genre (news and sports) or by geographic production and library, and have relatively strong balance sheets are least at risk," the report said.

Sarandos reiterated that Netflix's wide range of content will help the platform weather the strikes, but said bluntly, "That's beside the point. The real point is we need to get to this strike to a conclusion so that we can all move forward."

Striking writers and actors take part in a rally outside Netflix studio in Los Angeles on Friday, July 14, 2023. This marks the first day actors formally joined the picket lines, more than two months after screenwriters began striking in their bid to get better pay and working conditions. (AP Photo/Chris Pizzello)
Striking writers and actors take part in a rally outside Netflix studio in Los Angeles on Friday, July 14, 2023. (AP Photo/Chris Pizzello) (ASSOCIATED PRESS)

The executive's comments come as companies like Netflix have been heavily criticized by actors, who are fighting for more protections surrounding the role of artificial intelligence in media and entertainment in addition to higher streaming residuals as more movies and TV shows go direct to streaming.

"Part of the problem is that we're operating off of the old system," actor Sean Gunn told Yahoo Finance Live on Thursday. "It used to be very equitable for actors to participate in the profit sharing when there [were] shows that are in syndication. ...Well, the streamers came along, and they changed the whole model of how business is done. But they continue operating off the old model."

HOLLYWOOD, CALIFORNIA - APRIL 27: Sean Gunn attends the World Premiere of Marvel Studios'
Sean Gunn attends the World Premiere of Marvel Studios' "Guardians of the Galaxy Vol. 3" on April 27, 2023, in Hollywood, California. (Photo by Axelle/Bauer-Griffin/FilmMagic) (Axelle/Bauer-Griffin via Getty Images)

SAG has proposed that its members share in the revenue generated by streaming platforms when performances are shown, which the studios rejected, according to the negotiation document.

"I think a fair deal is percentages," Gunn said. "We're not asking for a flat sum. We want a percentage. That's fair because then when [the studios] cry, 'Oh, our profits are down, we're not making as much,' then okay, we'll participate in that too. We just want an appropriate portion of the profits that you're making."

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com

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