Netflix may be big, but it’s still ‘pretty small’, says CFO Spencer Neumann

Netflix believes it still has significant room for growth and does not need to rely on large acquisitions, according to chief financial officer Spencer Neumann.

Speaking at the Morgan Stanley Technology, Media & Telecom Conference, Neumann said the company’s decision to step away from efforts to acquire Warner Bros. Discovery (WBD) reflected its focus on organic expansion.

“Even though we’re pretty big, we’re pretty small,” the exec said at the Morgan Stanley Technology, Media & Telecom Conference.

Elaborating, he continued, “Every way we look at our addressable market, we’re still less than 10% view share in every country in which we operate. We’re about 7% of the addressable revenue market. So, we’re small in kind of every way that kind of measures the business in terms of even households for less than 50% penetrated. So we’ve got a strong runway for growth in the cores. We continue to focus on that, and that really is our focus. Again, I want to kind of reinforce that the runway of organic growth that we feel great about.”

Asked why the company chose to exit the bidding process, Neumann responded: “We’re not still in it?!”

“So hard to get a laugh in this room!”

Turning to the question, he said, “The short answer is that it’s all about price … This was always a position of offense, not defense.” He reiterated the messaging delivered in Netflix’s official statement at the end of the bidding process and in press interviews by Co-CEOs Ted Sarandos and Greg Peters. The assets were “nice to have at the right price, but not must-haves at any price.”

Meanwhile, Paramount has said its proposed takeover, valued at more than $110 billion in enterprise value, is expected to close by the third quarter.

On future industry relationships, Neumann noted that Netflix has both competed and worked commercially with companies such as Warner Bros. Discovery and Paramount.

He said such arrangements are common in the entertainment industry, where companies may compete while also maintaining licensing partnerships.

Neumann also referred to Netflix renewing Little House on the Prairie, which is produced by Paramount’s CBS Studios, as an example of continued collaboration.

Licensing relationships, he said, tend to change over time, adding that it remains to be seen how the merger developments could affect future arrangements. “The ball’s in their court, and we’ll see,” Neumann said.