Episode summary
Instant Reaction: Netflix Beats on Earnings, Disappoints on Cautious Forecast | Bloomberg...
Bloomberg Intelligence
· · Hosts: Carol Massar, Tim Stenovec, Paul Sweeney · Guests: Chris Palmeri, Eric Clark, Geetha Ranganathan
Summary
Netflix reported a quarter that beat Wall Street estimates, but the market focused on weaker guidance and higher spending tied to content and the Warner Bros. Discovery pursuit. Shares fell in after-hours trading as the company said it plans to boost program spending by 10% in 2026 and pause share buybacks to preserve cash for the deal. The transcript also notes Netflix spent about $18 billion on programming last year, has already incurred about $60 million in pursuit costs, and expects another $275 million in related costs.
The analysts and guests argued that the long-term case for Netflix still rests on scale, pricing power, and a still-small share of total TV time. Chris Palmeri said Netflix is competing not just with other streamers but with YouTube, TikTok and Instagram, while Eric Clark said the stock looks attractive on the pullback and that Netflix can keep growing even if the Warner Bros. deal fails. Geetha Ranganathan said the ad business is growing, but the company’s first disclosed ad revenue figure, about $1.5 billion in 2025, was below some expectations.
Warner Bros. Discovery remained the central strategic question. The guests said Netflix appears to be the favorite from Warner Bros.’ standpoint, but regulatory risk and competing bids keep the outcome uncertain. Clark argued that Warner’s library would be “in the best hands” at Netflix, while Ranganathan pointed out there is still room for streaming to take more viewing time from linear TV.
Key takeaways
- Netflix said it will raise content spending 10% in 2026 and pause buybacks to help fund the Warner Bros. Discovery bid, which pressured the stock after hours.
- Chris Palmeri said Netflix has already spent about $60 million on the deal pursuit and expects another $275 million in costs.
- Eric Clark said he would buy Netflix on the dip because the core business is still strong even if the Warner deal takes time or falls through.
- Geetha Ranganathan said Netflix’s first reported ad revenue figure was about $1.5 billion in 2025 and is expected to double in 2026, but that was slightly below some expectations.
- The guests said Netflix’s share of TV time is still below 10%, leaving room for further growth if it can keep raising prices and adding subscribers.
Notable quotes
“they largely beat Wall Street estimates they issued a cautious forecast for the months ahead citing higher program spending”
“The ad tier is growing like a weed”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world.
Looking at Netflix shares, they're continuing to move lower. this after the company reported results for the most recent quarter concerns about the guidance and boosting spending. The company saying for uh even though they largely beat Wall Street estimates they issued a cautious forecast for the months ahead citing higher program spending and then of course Carol the cost of closing its deal with Warner Brothers Discovery
Number of customers growing by almost 8% last year topping 325 million subscribers. Let's get um to our team who certainly follows it and of course our own Chris Paul Mary who's been following this company and the ins and outs of the pursuit of Warner Brothers Discovery. Chris there out there on uh the West Coast.
Chris, um you know, you've know this company, you followed it. Uh investors not too impressed. They're worried about I guess it seems like the spend um that's out there, but walk us through what really jumped out for you in their reporting.
Well, first of all, obviously investors have been really concerned about the Warner Brothers bid. the stock has lost a lot of money since the since the you know in October when it first came out that Netflix was interested in bidding and uh you still see concern here. I mean they said they've spent $60 million already on pursuing Warner Brothers.
They're anticipating another $275 million in cost for that. They paused their share buybacks which were considerable. It's a they had a $8 billion left uh in their uh buyback program so they can conserve cash for the Warner Brothers bid.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- netflix earnings
- streaming spending
- programming costs
- warner bros discovery deal
- subscriber growth
Companies and tickers mentioned
- NFLX
- Netflix
- Warner Bros. Discovery Inc.
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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