Geetha Ranganathan on Netflix Earnings (Radio)

of data. Once this penalty is unveiled, the story says, the government plans to ease an earlier restriction that bans d D from adding new users to its platform. It has tens of millions of users but wasn't able to add so this wrapping up of the investigation would pave the way for d D to kick start a new share listing in Hong Kong from a p and this

is also from the Financial Times earlier. China will take resolute and strong measures should the Speaker of the U S House of Representative, Nancy Pelosi, proceed with a reported to visit Taiwan. Now this was originally reported by the

Financial Times. She's originally scheduled, or was originally scheduled to visit in April, but had a postpone after she tested positive for COVID nineteen and from the Nick, Japan Airlines is planning to transfer about three thousand workers from its core business to its budget carriers and to non aviation units. And that's due to forecast of business travel not returning to pre pandemic levels for a prolonged period of time.

That's from the Nick. And back to that Wall Street Journal story we mentioned d d U the A d r S did advance in the U S session. That is a rap on the media. Nine minutes eight minutes now before the top of the hour, Yvon, all right, let's get more on those Netflix earnings. Now. Things could be turning around for the streaming company, losing fewer subscribers expected in the second quarter, but the company isn't projecting

a return to rapid growth anytime soon. Joining us now discuss all this is geta rocket, nothing, Bloomberg Intelligence, tech and media analysts and geta It's interesting because even read hastings at himself, losing close to a million subscribers can't be really seen as a success, but investors centainly are cheering the news what's your take overall, Yes, so Yvonne, definitely a mixed bag, you know, and I think right now we're we're you know, just with the stock having

taken such a beating, I think the general sentiment is just less bad is good, which is why we're kind of seeing this uh short term relief rally. But if you kind of just dig through the numbers a little bit and look under the hood. As far as the three Q guidance sys concerned, there's really not a whole lot to cheer about. Um. So they are guiding to growth, yes, so you know they're guiding to about a million subscriber ads.

But then you look at the number of subscribers that you've lost so far in the first half of the year, that's just over a million. So it's about one point two million or so. So this is really going to be a wash at the end of three Q. Uh. And there's really no clarity in terms of what the long term subscriber trajectory is going to be, uh, you know, especially with all these macro headmands kind of building. Um. But there are some positives, there are some positives to

think about. I mean, one thing was the valuation of the stock had dropped so far that you know there was some room there. Uh. The the the advertising option, which is which is coming. I guess they're testing in Latin America. I want to ask you specifically about that. Uh, that would seem to suggest that there could be some positives from that, but that it might be really slow in coming. That's exactly right, brand, So this is all going to

take a while. Yes, there are positives, Uh, definitely, as you pointed out, that they are trying to do their best in terms of monetizing all of these incremental revenue opportunities, whether it is cracking down or password sharing as as they are doing as they're testing out right now in Latin America, whether it's introducing that new ad vertizing tier. But again, remember none of these are inherently in their DNA. They have to build this from scratch, and so it

is definitely going to take time. Uh, you know, and and before like it kind of uh has a material impact on financials, it's going to be We're we're looking at at least another twelve to eighteen months before this really kind of boost the top line and the bottom line. And what really drove these results was you know, as they said one single thing, which was stranger things. I wonder in terms of how much they're saying that they're going to put into putting generally new content, what's in

the pipeline. Is there anything there to kind of sort of reverse this tide and actually beat the competition spending less? Yes, they are. They're actually holding spending flat at about seventeen billion dollars in cash content spend. Um. Is that a good thing? Well, yes, it does help them from you know, an overall financial perspective that is going to partly contribute to their free cash flow, their positive free cash flow guidance for about a billion dollars this year and substantial

growth into three. But then, um, you know, you do have their competitors kind of really really ramping up, um, you know, when it comes to content, whether it's a Disney, whether it's an Amazon Prime that's going after football, that's going after all of these expensive new drama series. You have Apple foraying into sports. So you have all of their competitors kind of really going after a huge, big,

massive pieces of content, taking big swings. And so I'm not necessarily sure it's a prudent move for Netflix to kind of hold back when you have competition ratcheting up so fiercely. That said, uh, and we always defer to you a gitab but just to challenge you a little bit um, you know, they did have the first mover advantage the name. I mean, you know you're gonna cancel. If you're going to cancel some streaming, Netflix wouldn't be first on your list. It would probably be last on

the list for for a lot of people. And and the past word strategy is kind of interesting. Is there some room there? The past word strategy is definitely interesting, But remember you have trained people over so many years now to kind of do this. They almost encouraged it in many ways, and so now suddenly to kind of clamp down on it. Uh, is I don't know if if it's really kind of going to bring in the

results that they're hoping it will. And remember that first introducing this in Latin America, and Latin America is is a very very price sensitive market. You have consumers who are you know, where the elasticity demand is extremely high. So I'm not really necessarily sure it's going to do a whole lot in terms of boosting top line revenue. That said, it's definitely a step in the right direction. We'll have to wait and water and see how that kind of plays out. Um, so yeah, I think they

are taking a lot of that. There are a lot of good initiatives in in the in the pipeline. But again, this is still very much a weight and watch story. And one one of the interesting things with Ozark. I guess that was one of the first where they sort of delayed the final episodes or split it into and it is not a strategy that kind of helps rather than you know, blow everything out of the door at once,

that you sustain your subscribers. That's actually a great point, and that staggered release schedule actually ted Sarandos just mentioned this on the call. He said, the main reason for the staggered release of you know, Stranger Things, for instance, one uh one drop in in in May and the second drop in July was really because they hadn't finished production. They hadn't wrapped up production on all of it. Of course, it does help, it does help with the with with

the subscriber churn numbers. And I'm just wondering, alright, we we have to go You're one of our favorites love, You are rung and often Bloomberg intelligence. This is Bloomberg