Netflix CFO Spencer Neumann said the company has plenty of room for growth despite its decision not to stay in the running to acquire Warner Bros. Discovery.
“Even though we’re pretty big, we’re pretty small,” the exec said at the Morgan Stanley Technology, Media & Telecom Conference.
Elaborating, he continued, “Every way we look at our addressable market, we’re still less than 10% view share in every country in which we operate. We’re about 7% of the addressable revenue market. So, we’re small in kind of every way that kind of measures the business in terms of even households for less than 50% penetrated. So we’ve got a strong runway for growth in the cores. We continue to focus on that, and that really is our focus. Again, I want to kind of reinforce that the runway of organic growth that we feel great about.”
Asked to explain at more length why Netflix opted to drop out, Neumann cracked, “We’re not still in it?!” After a few titters broke out in the audience, he added, “So hard to get a laugh in this room!”
Turning to the question, he said, “The short answer is that it’s all about price … This was always a position of offense, not defense.” He reiterated the messaging delivered in Netflix’s official statement at the end of the bidding process and in press interviews by Co-CEOs Ted Sarandos and Greg Peters. The assets were “nice to have at the right price, but not must-have at any price.”
Paramount says its takeover proposal, with an enterprise value of more than $110 billion, will close by the third quarter.
As to future dealings with Warner Bros. Discovery and Paramount, Neumann said Netflix has “competed for a long time with them and done business with them.” In the entertainment industry, “it’s more typical than atypical to compete and have commercial relationships. We hope and expect that that will be the case here too.’
He cited the decision to renew Little House on the Prairie, which is produced by Paramount’s CBS Studios, saying the company has moved on. Licensing “ebbs and flows,” he said, and it is unclear if WBD or Paramount would pull back as a result of the merger saga. “The ball’s in their court and we’ll see,” Neumann said.