Netflix Co-CEO Sarandos Acknowledges Slower Growth, Downplays Paramount-WB Merger Threat
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New comments from Netflix co-CEO Ted Sarandos show he is concerned the company is growing more slowly than he wants, while he remains unconcerned publicly about competition from the proposed Paramount-Warner Bros. merger. Speaking at a conference, he said Netflix is working to accelerate growth and argued its bid for Warner Bros. Discovery had been priced at the limit of what could create value for shareholders.
Netflix user engagement grew 2% year on year in the first half of 2026. Sarandos said live programming, a relatively new part of Netflix’s offering, creates headwinds for that measure, though the article does not give further detail. He also discussed a possible US federal production tax credit, saying it could help bring jobs back from countries such as the UK; he praised New Jersey’s incentives and criticised production conditions in California and Los Angeles.
- Sarandos says Netflix is not growing as fast as he wants.
- User engagement rose 2% in the first half of 2026.
- He says US production incentives could help bring jobs back.
New here? Start with this
Netflix is a streaming entertainment company that provides films and television shows to subscribers around the world. The company's ability to grow its audience is closely watched by investors and business analysts because it determines whether the company can remain competitive and profitable.
Ted Sarandos, Netflix's co-chief executive, has said that the company's growth is currently slower than it would like. In the first half of 2026, the number of users actively watching Netflix grew by just 2% compared to the same period a year earlier, and Sarandos attributed some of this slowdown to the effects of live programming, a relatively recent addition to Netflix's service.
Sarandos has expressed little concern about a planned merger between rival streaming companies Paramount and Warner Bros. Discovery, suggesting it does not pose the threat that some observers worry about. He also discussed how federal tax incentives could help Netflix relocate more of its production work to the United States from other countries, citing issues with production costs and conditions in some American locations.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Netflix's 2% user engagement growth year-on-year is concerning when paired with management's public downplaying of competitive threats. Market consolidation among rivals—particularly a Paramount-Warner Bros. merger—typically signals danger, not reassurance, and should warrant serious strategic concern rather than dismissal. When a company simultaneously admits growth is slower than desired and minimises the significance of major competitor consolidation, it suggests overconfidence about its market position rather than clear-eyed risk assessment.
The case against
Netflix's engagement metrics may not reflect true business health, especially as live programming legitimately creates measurement headwinds whilst actually expanding revenue opportunities and audience reach. At Netflix's enormous scale, modest percentage growth still represents substantial absolute user additions, and the company has successfully diversified beyond raw subscriber growth through advertising and dynamic pricing strategies. The Paramount-Warner Bros. merger, whilst significant, may pose less threat than traditional media observers fear, since streaming operates on fundamentally different economics than legacy distribution, and Netflix's structural advantages in technology, content production, and subscriber loyalty remain robust.
Full account
Netflix's co-chief executive Ted Sarandos has conceded that the streaming platform's expansion has slowed considerably, with viewer engagement increasing by only 2 per cent during the opening half of 2026. Speaking at Bloomberg's Screentime conference on Wednesday, Sarandos remarked that the company's trajectory falls short of his ambitions, though he indicated efforts were underway to accelerate the pace of development. The admission arrives as the sector faces significant structural shifts, including the imminent consolidation of rival entertainment assets.
The company has begun investing substantially in live broadcasting as a potential remedy to sluggish growth, with expenditure on live programming representing approximately 5 per cent of Netflix's annual $20 billion content allocation. However, Sarandos acknowledged that this investment has yielded modest direct engagement returns, accounting for roughly 1 per cent of total viewership. Nevertheless, he highlighted secondary benefits, noting that live offerings have proved effective in generating new subscriber acquisitions and reducing the rate at which customers cease their subscriptions. Advertising partners, he suggested, have demonstrated particular enthusiasm for this content category.
When confronted regarding the $111 billion merger between Paramount Global and Warner Bros. Discovery—a transaction finally approved by a judge the same day—Sarandos appeared largely unperturbed. He defended Netflix's earlier decision not to pursue a more substantial bid for the assets, characterising his company's valuation methodology as prudent. The pricing represented, he contended, the uppermost threshold at which the investment could generate shareholder value without descending into financial loss, even accounting for Netflix's considerable resources. He framed the transaction's impact on competitive dynamics as uncertain, suggesting that combining two streaming services may not necessarily produce proportional market consolidation.
The executive also clarified Netflix's strategic positioning in relation to digital creators and user-generated content platforms. Whilst acknowledging recent commercial arrangements with established content producers on YouTube, Sarandos stressed that Netflix remains fundamentally committed to professionally created programming rather than expanding into grassroots creator distribution. He suggested that opportunities existed to improve monetisation prospects for already-professional creators operating on other platforms, but emphasised that Netflix would not pursue wholesale migration of creator communities.
Separately, Sarandos addressed his engagement with political leadership, particularly regarding potential federal tax incentives for film and television production. He characterised the current administration as genuinely committed to supporting the entertainment industry, noting that state-level incentive competition had historically disadvantaged American production relative to international locations offering more substantial tax benefits. A coordinated federal programme, he argued, would provide competitive compensation to retain production activity domestically across all fifty states, where Netflix has established production operations.
Where outlets differ
Source 1 emphasises Netflix's live programming metrics and audience engagement challenges, devoting substantial space to the return-on-investment analysis for live content and its ancillary benefits.
Source 2 prioritises competitive positioning and interpersonal industry dynamics, including discussion of Casey Bloys' expected role in the merged entity and Sarandos' measured response to recruitment speculation.
Source 1 focuses on Netflix's strategic content philosophy regarding user-generated content and platform partnerships, whilst Source 2 concentrates on policy advocacy and the Trump administration's stance on production incentives.
Both sources use identical quotes on market consolidation mathematics, but Source 1 frames this within broader growth narrative concerns, whilst Source 2 presents it as dismissal of competitive threat.
Coverage
- The Hollywood Reporter — Ted Sarandos Admits Netflix Is “Not Growing as Fast as I Want Us To”
- Variety — Netflix’s Ted Sarandos on If He Sees Paramount-Warner Bros. As Competition, and If He Courted Casey Bloys: ‘We Had a Very Well-Publicized Lunch’