Will the Deal Be Priced In?

Netflix’s earnings beat expectations, but the numbers reveal a business increasingly reliant on optics, pricing, and financial engineering rather than underlying engagement growth.

In this live earnings breakdown episode of The Media Odyssey Podcast, Evan Shapiro and Marion Ranchet analyze Netflix’s latest quarterly results, separating headline wins from structural concerns. 

While revenue, profit, and subscriber figures all came in strong, deeper engagement metrics tell a more cautious story. The conversation focuses on growth rates, viewing hours, ad revenue contribution, and the financial implications of Netflix’s proposed Warner Bros. Discovery acquisition.

The Numbers: 
 

1. Netflix Reported 325 Million Subscribers (After Saying It Would Stop)

Despite previously stating it would no longer report subscribers, Netflix disclosed a global total of 325M, reframing what likely ~23M net adds without explicitly saying so.

2. Revenue and Profit Growth Remain Strong

Netflix reported +15% revenue growth in Q4 and +16% for the full year, with net income up ~25% in Q4 and ~26% year over year, comfortably beating Wall Street expectations.

3. Engagement Growth Is Essentially Flat

Total viewing reached 191B hours annually, up only ~1B hours half-over-half. Average viewing now sits at roughly 1.7 hours per subscriber per day, down from ~2 hours a few years ago.

4. Netflix’s Share of Total TV Viewing Remains Under 10%

Even during an all-time high month driven by Christmas Day, Netflix accounted for ~9% of total TV usage per Nielsen Gauge data.

5. Advertising Generated ~$1.5B, Still Only ~3% of Revenue

Netflix disclosed $1.5B in ad revenue, representing roughly 2–3% of total revenue, with management signaling plans to double and eventually triple that figure.

6. Roughly 40% of New Subscribers Are on the Ad Tier

Third-party estimates suggest ~40% of recent subs are ad-supported, but Netflix provided no ARPU, churn, or engagement data tied to those users.

7. Guidance Was Lowered Despite the Earnings Beat

Netflix reduced forward guidance, contributing to a ~7% stock drop overnight, highlighting investor concern despite strong backward-looking results.

8. The Proposed Warner Bros. Deal Would Push Debt to ~$85B

If completed, Netflix would take on roughly $50–54B in new debt, bringing total obligations close to $85B, a key factor behind market skepticism.

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Connect with us on Linkedin:

Evan Shapiro - https://www.linkedin.com/in/eshap-media-cartographer/

Marion Ranchet - https://www.linkedin.com/in/marionranchet/

The Media Odyssey Podcast - https://www.linkedin.com/company/the-media-odyssey-podcast

• (00:00) - Introduction and Welcome
• (00:14) - Event Highlights and Advertising Chat
• (00:53) - Netflix Earnings Report Breakdown
• (02:36) - Subscriber Numbers and Engagement
• (04:44) - Netflix's Strategic Moves and Market Reactions
• (05:47) - Streaming Industry Trends and Predictions
• (06:59) - Warner Brothers Discovery Deal Analysis
• (09:34) - Global Market Insights and HBO Content
• (16:37) - Advertising Business and Future Prospects
• (19:09) - Ad Strategies and Market Competition
• (20:01) - Disney's Ad Selling Prowess vs. Warner Brothers' Struggles
• (20:39) - Netflix's Efforts to Improve Ad Sales
• (20:53) - Live Q&A Session Begins
• (21:34) - Disney's Model and Market Competition
• (23:11) - Warner Acquisition and Franchise Opportunities
• (26:56) - Vertical Video and Social Features
• (31:19) - Global Market Opportunities and Challenges
• (33:48) - Wrapping Up and Audience Engagement