Reed Hastings’s planned exit from $455 billion Netflix ‘had nothing to do with’ the failed deal for Warner Bros., says Ted Sarandos | Fortune

The 65-year-old cofounder and former CEO of the world’s largest streaming service introduced on Thursday that he received’t stand for reelection to the board on the firm’s annual shareholder assembly in June, ending a 29-year run on the firm he created in 1997. In a press release included within the first quarter investor letter, the billionaire mentioned he’s leaving to deal with philanthropy “and different pursuits.” He gave shoutouts to co-CEOs Greg Peters and Ted Sarandos, who took full management of Hastings’s government function in January 2023.  

“A particular because of Greg and Ted, whose dedication to Netflix’s greatness is so robust that I can now deal with new issues,” mentioned Hastings.

Whereas Netflix has proven its enterprise can thrive with out Hastings in an working function, the founder’s full separation from the corporate is one thing of an anomaly within the tech world the place founders sometimes stay on the board of administrators for years. Nor did the timing of Hastings’s exit—coming shortly after Netflix’s failed try to amass Warner Bros.—go unnoticed.

So is Hastings’s departure associated to Netflix’s tried buy of the Hollywood film studio, an analyst requested throughout Netflix’s earnings name on Thursday?

Completely not, mentioned co-CEO Sarandos.

“Sorry for anybody who was in search of some palace intrigue right here, not so,” Sarandos mentioned, in what was Netflix’s first earnings name because it walked away from the deal in February.

Netflix proposed the $27.75 per-share deal for Warner Bros. in January. Warner Bros. accepted, after which in February 2026 Warner Bros. advised Netflix that David Ellison’s Paramount Skydance had submitted a greater proposal. Paramount Skydance paid Netflix a $2.8 billion termination price within the deal. 

The analyst who requested the query Thursday famous that Hastings was traditionally against massive acquisitions, however Sarandos mentioned the Netflix founder was totally on board with the plan to buy Warner Bros. Discovery’s studio enterprise and streamer HBO Max for an enterprise worth of $82.7 billion.

“Reed was an enormous champion for that deal. He championed it with the board; the board unanimously supported the deal, so … that completely had nothing to do with it,” Sarandos mentioned.

Shares of Netflix plunged as a lot as 9% in after-hours buying and selling on Thursday, as the corporate beat first-quarter monetary targets however forecast second-quarter income and earnings under Wall Avenue expectations, in response to Bloomberg.

‘We didn’t lose focus’

Sarandos mentioned the corporate is wanting forward and never backward.

“On the danger of being a damaged document, I simply need to remind you that we mentioned this from the start, that the WB deal was a pleasant to have, not a have to have,” Sarandos mentioned throughout Netflix’s name with analysts. “Our largest danger was dropping deal with our core enterprise whereas we have been engaged on the transaction, and as you’ll be able to see from our Q1 outcomes, we didn’t lose focus.”

Netflix reported internet revenue of $5.3 billion for the primary quarter of 2026, up about 82.8% from $2.9 billion a 12 months in the past. Income rose 16.2% to $12.25 billion. The $2.8 billion from Paramount Skydance boosted the streamer’s free money movement to $5.1 billion, prompting Netflix to boost its full-year 2026 free money movement forecast to $12.5 billion, up from $11 billion. 

Sarandos mentioned the corporate strengthened its “M&A muscle” in designing the bid and dealing with regulators on approvals. One of many advantages of the train was that executives examined their “funding self-discipline, and when the price of this deal grew past the web worth to our enterprise and to our shareholders, we have been keen to place emotion and ego apart and stroll away.” 

Netflix additionally detailed three strategic priorities in its investor letter, mapping out its playbook now that the Warner Bros. deal is off the desk. The corporate is specializing in extra leisure, leveraging know-how, and enhancing monetization.

Netflix mentioned it could develop into video podcasts and reside occasions, together with the World Baseball Basic in Japan, which drove its single largest day of Netflix sign-ups within the nation. It additionally plans to leverage know-how to enhance its service, flagging its March acquisition of Hollywood actor and director Ben Affleck’s AI-powered moviemaking device, InterPositive. 

Netflix can be revamping cellular viewing with a vertical video discovery feed launch deliberate for the tip of April. Its ad-supported worth tier represented 60% of all sign-ups in international locations the place it’s an choice, and Netflix mentioned it expects $3 billion in advert income this 12 months, double its 2025 figures.  

Peters reaffirmed the corporate’s monetary objectives of income development of 12% to 14% and working margin of 31.5%. He mentioned Netflix’s viewers is approaching 1 billion folks, which Peters mentioned will probably be “an thrilling milestone to try for” that leaves it with “loads of room to develop.” He mentioned Netflix’s market penetration is beneath 45%.