Netflix earnings show strength amid media chaos
LOS ANGELES, CALIFORNIA - JUNE 12: CEO of Netflix Ted Sarandos attends Netflix's FYSEE event for "Squid Game" at Raleigh Studios Hollywood on June 12, 2022 in Los Angeles, California. (Photo by Charley Gallay/Getty Images for Netflix)
The main takeaway from Netflix 's second quarter earnings is business is ... good.
That's right. A large media and entertainment company's fundamental business is just fine.
Netflix added 5.9 million subscribers in the quarter, a sign that its two primary 2023 initiatives — cracking down on password sharing and launching a cheaper $6.99 per month advertising tier — are bringing in new subscribers. Netflix added 1.2 million subscribers in the United States and Canada in the quarter — its largest regional quarterly gain since 2021.
This is not the story for the rest of the media industry. Disney and Warner Bros. Discovery have spent the year slashing content from its streaming services to avoid paying residuals and saving on licensing fees. Both companies have laid off thousands of employees over the past 12 months to boost free cash flow. Paramount Global and Comcast 's NBCUniversal both said 2023 will be the biggest annual loss ever for their streaming businesses.
Meanwhile, Netflix boosted its free cash flow estimate to $5 billion for the year. Previously, the company had estimated it would have $3.5 billion, but the actors and writers strikes will cut down on content spend. That means Netflix will actually have even more cash than it previously expected.
Next quarter, Netflix forecast subscriber gains will be about 6 million again. The company said revenue will accelerate in the second half of the year as it sees "the full benefits" of its password-sharing crackdown and steady growth in its ad-supported plan.
Source: CNBC
