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Erik's Spin


A Question Too Far?

1 Oct, 2013 By: Erik Gruenwedel

CNBC media reporter Julia Boorstin

Netflix named JP Morgan analyst Doug Anmuth to join BTIG Research analyst Richard Greenfield as co-moderators for streaming pioneer’s Oct. 21 third-quarter video fiscal call.

Anmuth replaces CNBC media and entertainment reporter Julia Boorstin, who along with Greenfield, hosted Netflix’s first-ever video call in July.

Netflix spokesperson Joris Evers said the switch was part of the company’s strategy to “keep trying new things.” He didn’t elaborate or indicate why Greenfield is returning and Boorstin isn’t.

From the outset, the streaming video format was typical for a pioneer like Netflix. Analysts and investors submitted questions in advance to Boorstin and Greenfield, who then organized them into theme questions presented to CEO Reed Hastings, CFO David Wells and CCO Ted Sarandos — the latter making his first appearance on a quarterly call.

The format, which represented a break in protocol from the traditional corporate webcast whereby analysts phone in or email questions to the CEO and CFO, generated its share of controversy. Notably, Wedbush Securities analyst Michael Pachter said the moderators would have an unfair advantage controlling the questions that some might consider deferential  to Netflix.

Greenfield, in an email prior to the first video call, was adamant he would remain independent prior, during and after the event. And by all accounts he succeeded asking straight forward questions, including the impact “Arrested Development” had on new subscribers, clarification on “basis points,” margins, and related financial queries.

Boorstin, who clearly relished her role and was most at ease in front of the video cam, approached the Q&A as she would an interview with a newsmaker on CNBC — trying to find that one question that would result in a notable sound bite.

Indeed, Boorstin’s began the event questioning Hastings about the alleged controversy surrounding the third-party hosted video format — a query that appeared to irritate the CEO.

“I think we should process that after the interview and let's see if it's productive and useful for investors and see what they think,” Hastings responded.

Then she asked Sarandos how many people watch Netflix originals.

Viewer data, along with price hikes and churn, are subjects Netflix executives like to avoid. Netflix, a while ago stopped reporting churn , opting instead to focus on net adds. Boorstin knew this but asked anyway.

The SVOD service, per policy, also refuses to disclose how many people watch original programming like “House of Cards,” “Arrested Development,” “Hemlock Grove,” and “Orange is the New Black,” among others.

The non-disclosure is a sore spot within the TV industry since broadcast networks live and die by Nielsen ratings. Netflix argues that since it doesn’t have to appease advertising, viewer tallies are immaterial.

Price hikes is another matter. When Netflix in 2011 infamously increased by 60% the price of its popular hybrid streaming/disc rental plan, subscribers jettisoned in droves, the media pounced, and Hastings was left offering confusing explanations that sent the stock into a tailspin and had many questioning his leadership.

Undeterred, Boorstin again asked about a price hike and viewer data. And Hastings and Sarandos again denied the existence of any pending price hike or program ratings.

“We are going to keep on asking for numbers. Some day, Ted, you will give one to me,” she quipped.

Pachter said Boorstin’s departure is a negative.

“I thought that [she] gave an appearance of objectivity, which has been removed now,” he said.

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