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Behind Reed Hastings’s Step Back as Netflix Co-C.E.O.


For 25 years, Reed Hastings was not only Netflix’s co-founder, but in addition its most visible cheerleader and advocate. Yesterday he announced that he would relinquish his co-C.E.O. title to a top deputy and develop into executive chairman.

The change comes because the streaming giant grapples with some of the difficult moments in its history: Competitors are coming on strong, and Wall Street is keeping a detailed eye on its bottom line.

Mr. Hastings’s move had long been within the works. “Our board has been discussing succession planning for a few years,” he wrote in a corporate blog post, comparing the move to the changing of the guard at other tech corporations — think Jeff Bezos at Amazon last yr, or Bill Gates at Microsoft — to offer strategy to the subsequent generation of leadership. (It’s hard not to check the relative smoothness of this transition to, say, that of a key Netflix rival, Disney.)

Who’s stepping up? Picking up the co-C.E.O. role is Greg Peters, an architect of Netflix’s much-anticipated ad-supported subscription offering, who’ll share the title with the longtime Hastings lieutenant Ted Sarandos. (Setting tongues wagging in Hollywood was the extra news that Bela Bajaria, the corporate’s head of television who was recently profiled in The Latest Yorker, was promoted to chief content officer.)

Does Mr. Hastings’s move signal anything about Netflix’s prospects? Over the past yr, the corporate has sought to reassure investors about numerous issues, including:

  • Slowing subscriber growth, plus an actual drop in subscriber numbers last yr, which drove a pointy slide in its stock.

  • Advances by rivals like Disney and Amazon, a troublesome thing to swallow for an organization that commonly says its predominant competition includes sleep.

  • Its own multibillion-dollar debt-financed binging on content production, with no clear sense of the return on that investment.

Those challenges prompted Mr. Hastings, who said he had been largely delegating day-to-day management over the past two-and-a-half years, to develop into more hands-on again. (His reasserted presence was also seen as essential as Netflix began taking steps it had long dismissed as unnecessary, like launching the cheaper, ad-supported service and cracking down on password sharing.) Recode’s Peter Kafka surmises that Mr. Hastings’s willingness to vary roles might mean he believes Netflix has put the worst behind it. And investors sent shares higher in premarket trading.

In fact, it helped that Netflix had good financial news to report alongside its leadership transition, including better-than-expected subscriber and revenue growth. The query now is whether or not Netflix is really within the clear, and whether Mr. Hastings will truly step back as Bezos has up to now — or find that he has to reassert himself again.

Google’s parent company will cut 12,000 jobs. Alphabet announced the layoffs, amounting to six percent of its work force, this morning. The move puts Alphabet alongside Meta, Microsoft, Salesforce and other Silicon Valley titans in turning to job cuts to grapple with a slowdown in digital promoting and the economy more broadly.

The U.S. begins “extraordinary measures” to avert default. Because the country hit the debt ceiling yesterday, the Treasury Department began moving money around to make sure the federal government can meet its financial obligations and avoid economic disruption or a default. Expect a protracted slog to finish the standoff.

The crypto lender Genesis files for bankruptcy. The embattled company sought Chapter 11 after struggling within the wake of FTX’s collapse. It’s the newest blow to Genesis’s parent company, Digital Currency Group; one other a part of the crypto conglomerate, the industry publication CoinDesk, has hired Lazard to assist it explore a sale.

A fat-fingered computer error is accountable for the F.A.A.’s computer outage. The federal airline regulator said that a government contractor who inadvertently deleted crucial files — and never a malicious hacker — caused last week’s system failure that grounded all flights into, inside and out of the U.S. for hours.

Rupert Murdoch testifies in a defamation lawsuit against Fox News. The media mogul began a two-day deposition yesterday over his network’s coverage of unfounded allegations of vote-rigging within the 2020 presidential election. Dominion Voting Systems, which brought the lawsuit, is in search of $1.6 billion in damages.

Firms that after hoped to avoid Karl Racine, the previous attorney general of the District of Columbia who was known for taking up corporate giants like Amazon, Facebook and Google, might soon be in search of him out. Mr. Racine joined the law firm Hogan Lovells this week to steer a practice for clients coping with state-led campaigns over every thing from consumer rights and antitrust to environmental, social and company governance, or E.S.G., initiatives.

Mr. Racine spoke with DealBook about expected developments. The interview has been edited and condensed for clarity.

What’s next within the E.S.G. wars?

We’ve seen governors and treasurers exit and seek to drag money out of certain pension funds because they claim that investment managers are using E.S.G. inappropriately. Well, one can foresee that beneficiaries — having seen the record of returns of the investment managers who’re being penalized for using E.S.G. — could organize and tell those states to maintain politics out of the investment world.

Can businesses keep off?

The Kentucky Bankers Association recently sued the attorney general there to enjoin his investigation into financial institutions’ use of E.S.G. That is important litigation, and I feel that you simply’re gonna see increasingly of this.

What else are you watching?

The realm of covenants to not compete could be very striking and essential, and we saw the F.T.C. move into that arena pretty broadly. The noncompete historically has been used to essentially restrict and limit hourly wage employees just working to make ends meet. Once you begin banning noncompetes all across the board, you’ve got to be really attentive as to what the impacts are and why corporations devote time, energy and resources to recruiting and training and promoting people.

What big theme do you see emerging in 2023?

The entire idea of presidency increasingly playing a job in business and the politicization of how businesses decide to operate. I feel you’re going to see rather a lot around that subject material, namely about government intrusion into the workings of business.

John Ray III, the brand new C.E.O. of FTX, on the opportunity of resuming operations on the bankrupt crypto trading exchange’s predominant international business unit.

What are the present trends that would change the longer term? Nassim Nicholas Taleb popularized the concept that essentially the most consequential “black swan” events are sometimes unpredictable. The Atlantic Council, a think tank, uses the term “snow leopards” to explain phenomena that would change the course of history, but that almost all of us may miss. DealBook got a primary take a look at its list for this yr.

  • A push to control algorithms is gathering pace. They influence what we see online, direct us on GPS and drive advances in machine learning and artificial intelligence. Governments are increasingly calling for stricter rules to rein in algorithms and make creators accountable for any harm they cause, but expect Big Tech to keep off.

  • Battery tech could democratize EV ownership. Electric vehicles could develop into cheaper and more efficient because of a shift in how battery tech is used. Structural batteries built right into a automotive’s frame can reduce weight, improve its range and cut production costs.

  • Geoengineering can have unintended consequences. China and the United Arab Emirates are “seeding” clouds, and India and the U.S. are making advances in geoengineering, interventions within the environment to mitigate climate change. However the projects could also alter regional weather patterns, and there’s a danger that some countries may act unilaterally before the consequences are well understood.

  • Pre-emptive corporate decoupling from China may speed up. As tensions between the West and China escalate, wary corporations that fled Russia last yr may shift away from China before they’re forced to achieve this. Notably, Apple is reportedly attempting to shift some iPhone production to India, and Alphabet might move some Google Pixel phone manufacturing to Vietnam.

  • Two key U.S. allies could reconcile and shake up the Indo-Pacific. Japan and South Korea have been at loggerheads for years over grievances that date back to World War II. But there are signs that the neighbors — which each host tens of 1000’s of American troops — could overcome their differences, a move that may bolster the U.S.’s efforts to present a united front against a more assertive China, North Korea and Russia.

  • Platform employees are organizing worldwide. Non-contract employees who provide delivery, driving and other services through online platforms are fighting for higher conditions and pay, with strikes and protests in Brazil, Britain and the Philippines a sign of a rising movement. Those efforts may lead to more government protections for a lot of within the informal economy.

What do you think that? Are there any snow leopards that they’ve missed? Email us at dealbook@nytimes.com.



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