‘Succession’ is not just a hit show on Netflix about a fictitious powerful media and entertainment company but a theme that the board of the global streaming giant has been toying with for a decade now. And it comes to fruition today as its Founder Reed Hastings hands over the reins to his former Co-CEO and COO and now co-CEOs Ted Sarandos and Greg Peters.
The DVD rental company founded in 1997 has grown into a streaming giant generating $32 billion in revenue with more than 230 million paying subscribers. Here’s how it created its succession plan involving a shared CEO position.
“Our board has been discussing succession planning for many years (even founders need to evolve!). As part of that process, we promoted Ted to co-CEO alongside me in July 2020, and Greg to Chief Operating Officer – and in the last 2½ years I’ve increasingly delegated the management of Netflix to them,” Hastings informed shareholders in a letter along with the fourth quarter results announcement.
Calling it “baptism by fire” with COVID-19 and challenges to their business model after the initial pandemic-led growth spurt, he said they both managed well a developed a clear path to re-accelerate revenue and earnings growth. “So the board and I believe it’s the right time to complete my succession.”
In a post-result earnings call he spoke about how the process really began 10 years ago. “I will be Executive Chairman, helping them everywhere I can, but it’s really theirs to lead and to do that energy and hustle and intensity that we have been doing. They are very ready. That’s what’s driving the timing and so I could not be happier.”
Co-leadership and transition
Ted Sarandos, who continues in the Co-CEO role he has held since July 2020, said in the earnings call that Hastings “generously opened up more of a co-leadership model over a decade ago”, which was made a little more formal 2.5 years ago by delegating a lot of the day-to-day to Greg and him.
“In the last 2.5 years, particularly, we have been able to build a really trusting, respectful and complementary partnership. In many ways, the same way I have with Reed over the years. And I really do believe that this kind of shared leadership model is going to help us to move fast and to challenge each other, to challenge the company to raise to new heights…It’s (the leadership team) been pretty stable and that’s why that this steady transition feels so steady.”
What does this mean for Netflix?
In the earnings call, new co-CEO Greg Peters said there will be no big strategy shift or big culture shifts. “So really, we look forward to taking things forward as we have been for the last little bit in responding to a dynamic industry and doing the changes that we think are appropriate. But we don’t have a bank of changes that we have been holding for this moment. So mostly, it’s continuity and move forward.”
Other management changes
The media giant has also promoted former Head of Global TV Bela Bajaria to Chief Content Officer and Scott Stuber as Chairman of Netflix Film.