San Francisco (United States) (AFP) – Netflix shares fell more than five percent on Tuesday as the streaming entertainment giant said it expected revenue to be essentially flat in the current quarter after years of growth. Netflix posted a profit of $2.4 billion on revenue of $12 billion in the final three months of last year and forecast taking in $12.1 billion in revenue this quarter. Shares were down more than 4 percent to $83.07 in after-market trades.
Netflix is focused on improving its core business by increasing the variety and quality of shows and films and also strengthening its ad business, co-chief executive Ted Sarandos said during a streamed earnings interview. The streaming giant aims to double revenue from its ad business to $3 billion this year, according to Netflix chief financial officer Spencer Neumann. “The top line numbers generally look pretty healthy,” Gabelli Funds portfolio manager John Belton said of Netflix’s earnings report, noting that an updated subscriber number topping 325 million showed solid membership growth last year.
Sarandos touted a strong lineup of shows, including upcoming new seasons of “Bridgerton” and “One Piece,” as well as a deal to stream the coming World Baseball Classic to viewers in Japan.
The earnings report came as Netflix presses a bid to buy television and film titan Warner Brothers Discovery (WBD). “Big picture, we just saw a tremendous and achievable opportunity in bringing these two businesses together,” Netflix co-chief executive Greg Peters said on the earnings call. Netflix on Tuesday revised the terms of the proffered deal to make it all-cash and to provide WBD shareholders with more certainty about the transaction, the company said in a release. The revision is expected to enable a shareholder vote on the deal, backed by WBD’s board, by April of this year.
“The WBD board continues to support and unanimously recommend our transaction, and we are confident that it will deliver the best outcome for stockholders, consumers, creators, and the broader entertainment community,” Sarandos said in a release. “The acquisition will also significantly expand US production capacity and investment in original programming, driving job creation and long-term industry growth.”
Paramount Skydance said earlier this month that it has filed a lawsuit against WBD as it presses an unwelcome bid to buy the CNN-parent company. Paramount’s suit seeks to compel the WBD board to provide certain information to shareholders that it argues will cast its offer in a more favorable light. The suit, and a letter to WBD shareholders by Paramount Skydance chief executive David Ellison, are moves in a saga spanning several months.
Television and film titan WBD put out word in late October that it was open to acquisition offers, with its board subsequently accepting a bid by streaming giant Netflix. WBD formally rejected an offer from Paramount Skydance for the entire company. The Netflix offer favored by the board does not include buying WBD television properties such as CNN and Discovery, which would belong to a newly created and publicly traded company called Global Networks if the deal is sealed.
“We are committed to seeing our tender offer through,” Ellison said in the letter to WBD shareholders. “If WBD calls a special meeting ahead of its annual meeting to vote on the Netflix Agreement, Paramount will solicit proxies against such approval.”
© 2024 AFP
