Netflix’s Reed Hastings has made it clear ‘he’s not going anywhere’: Reporter

Dawn Chmielewski, Reuters U.S. Entertainment Business Correspondent and “Binge Times” Co-Author, joins Yahoo Finance Live to discuss Netflix's outlook following news of co-founder Reed Hastings stepping down as CEO, the platform's new leadership, and acquisition possibilities for the streaming service.

Video Transcript

DAVE BRIGGS: Shares of Netflix surging today just about 8.5% on a stellar earnings report in which the streaming giant added more than 7 million subscribers-- up big time more, than twice that this year. The headline, however, remains CEO Reed Hastings stepping down as co-CEO. Joining us now is Dawn Chmielewski, "Reuters" US Entertainment Business Correspondent and Co-Author of "Binge Times."

Nice to see you. So let's talk about this Reed Hastings departure-- going to stay on as chairman. Greg Peters, COO, will join Sarandos as co-CEO. What do you make of the transition and how they handled it?

DAWN CHMIELEWSKI: Well, I think it's gotten rather enthusiastic response from the investment community. So Netflix has been planning for this for a decade, or so they say. And 2 and 1/2 years ago, Ted Sarandos, who has long been the content chief at Netflix, was elevated to a new role of co-CEO.

And his now co-CEO Greg Peters was elevated to a chief operating officer-- operating role like 2 and 1/2 years ago. So these executives have been working together for 2 and 1/2 years. There doesn't appear to be any sort of conflict. So this transition translated to the Street as being a really smooth transition from the company's co-founder to two executives who've been working together for 15 years and in this leadership role for the last 2 and 1/2. So it wasn't a particularly jarring transition. It seems, in fact, more effortless than some media-- some of their media peers here in Hollywood.

SEANA SMITH: Dawn, I think maybe the question here is whether or not this is going to change the culture at all. Because when it comes to Netflix's culture, it's really been a standout among Silicon Valley-- 125-page slide deck that describes its culture has been downloaded 17 million times. So it really just shows the interest in Netflix's culture. Are you expecting that to change at all?

DAWN CHMIELEWSKI: So that was a key question that we were examining. As you know, Reed Hastings credits this company's very distinct culture-- it has a performance culture, it invests a lot of autonomy in its executives. And Reed credits this sort of independence that it affords these high performing executives who come to the company with the company's success.

But in interviews yesterday with Jessica Ehrlich during Netflix's earnings video, the new co-CEOs sought to assure the Street that everything-- nothing will change. That they will attempt to adhere to the culture that Reed Hastings created and that they've worked within for well more than a decade. So they say no changes ahead, which, perhaps, explains how the market is reacting.

DAVE BRIGGS: And no changes in terms of the co-CEO role, which you really don't see anyone else in that space do. Is that-- obviously, content is king, but is that part of the special sauce there at Netflix? Why does it work so well for them?

DAWN CHMIELEWSKI: So it's really interesting-- as you know, the history of co-CEOs is not always a stellar one in the tech world. Oracle, for example, had co-CEOs not that long ago, ditto for salesforce.com. And it doesn't always work out.

In this case, you have two executives with clearly delineated roles. You have Ted Sarandos, who is the architect of Netflix's drive into original content, and you have Greg Peters, who has more of a technical orientation, who is credited with helping Netflix rather quickly launch an ad-supported version of its service. He is behind the initiative-- Netflix initiative to get into games. So he has a much more technical orientation. And these two are seen as having complementary skills.

SEANA SMITH: Dawn, from your coverage of Reed Hastings, everything you know about him, obviously, extremely invested in Netflix given that he's a co-founder, been with the company since the start-- over 20 years. Now that he's chairman, I guess how much do you really see him stepping aside versus his involvement with the company still?

DAWN CHMIELEWSKI: Well, Reed Hastings in his message to investors was explicit in saying that he's not going anywhere. He will remain attentive to the company that he helped found, that he will be paying careful attention to the company's stock price, and will no doubt play a role in helping inform the company's direction for some time to come. He is handing over the reins of daily day-to-day operation to two trusted deputies who have already demonstrated their ability to lead the company.

DAVE BRIGGS: Netflix has been mentioned in about a handful of names that could potentially acquire WWE, which makes sense when you compare the market cap is basically about four seasons of NFL rights. Could they be in that conversation? Or will 2023 for Netflix be defined by what, do you think?

DAWN CHMIELEWSKI: So I think Ted Sarandos has actually addressed the question about sports very directly. And I believe it was during a UBS conference fairly recently. So Ted is saying, look, I'm not going to say we'll never get into sports content.

And, indeed, Netflix has had some success with dramatic programming built around sports, like its Formula One series was very successful and actually spurred interest in the racing sport. But Ted has said, we don't need to have sports rights to continue to grow our business, at least not in the near-term. And he's also said that those rights are expensive compared with the other the cost of other sorts of content that attract subscribers.

DAVE BRIGGS: But I'm not talking about sports rights.

DAWN CHMIELEWSKI: At least recently, you know, Ted has signaled they're not they're not in the sports-- not in the bidding for sports rights.

DAVE BRIGGS: But, one, WWE is not a sport, I think it's more of an entertainment. And this isn't sports rights, this is an acquisition, really.

DAWN CHMIELEWSKI: Yeah, we'll see. I don't want to speculate about deals that they haven't done. That gets me in trouble with my editors.

SEANA SMITH: We'll see what Netflix does. All right, Dawn Chmielewski, Thank you so much for joining us.

DAWN CHMIELEWSKI: Thank you.