Ted Sarandos states Reed Hastings’s departure from $455 billion Netflix is unrelated to the failed Warner Bros. deal

(SeaPRwire) –   What’s the next chapter for Netflix? It marks the start of a post–Reed Hastings era.

The 65-year-old cofounder and former CEO of the world’s largest streaming service announced Thursday that he will not stand for reelection to the board at the company’s June annual shareholder meeting, bringing an end to his 29-year tenure at the company he founded in 1997. In a statement included in the first quarter investor letter, the billionaire said he is stepping down to focus on philanthropy “and other pursuits.” He publicly praised co-CEOs Greg Peters and Ted Sarandos, who took full control of Hastings’s executive role back in January 2023.

“A special thanks to Greg and Ted, whose dedication to Netflix’s success is so strong that I can now turn my focus to new things,” said Hastings.

While Netflix has already proven its business can thrive without Hastings holding an operational role, the founder’s full departure from the company is unusual in the tech industry, where founders typically remain on the board of directors for many years. The timing of Hastings’s exit, which came shortly after Netflix’s failed bid to acquire Warner Bros., also did not go unnoticed.

During Netflix’s Thursday earnings call, an analyst asked: Is Hastings’s departure connected to Netflix’s attempted purchase of the Hollywood movie studio?

Co-CEO Sarandos flatly stated it was absolutely not connected.

“Sorry to anyone hoping for some behind-the-scenes palace intrigue here, but there isn’t any,” Sarandos said, in what was Netflix’s first earnings call since the company walked away from the deal in February.

Netflix proposed a $27.75 per-share deal for Warner Bros. in January. Warner Bros. accepted the offer, then in February 2026 Warner Bros. informed Netflix that David Ellison’s Paramount Skydance had submitted a superior proposal. As part of the arrangement, Paramount Skydance paid Netflix a $2.8 billion termination fee.

The analyst who raised the question Thursday noted that Hastings has historically opposed large acquisitions, but Sarandos said the Netflix founder was fully supportive of the plan to purchase Warner Bros. Discovery’s studio business and streaming platform HBO Max for an enterprise value of $82.7 billion.

“Reed was a big champion for that deal. He advocated for it to the board, the board unanimously supported the deal, so … that absolutely had nothing to do with his exit,” Sarandos said.

According to Bloomberg, Netflix shares dropped as much as 9% in after-hours trading Thursday, after the company beat first-quarter financial targets but projected second-quarter revenue and profits that fell below Wall Street expectations.

‘We did not lose focus’

Sarandos said the company is focused on looking forward, not back.

“At the risk of repeating myself, I just want to remind you that we said this from the beginning: the WB deal was a nice-to-have, not a must-have,” Sarandos said during Netflix’s call with analysts. “Our biggest risk was losing focus on our core business while we worked on the transaction, and as you can see from our Q1 results, we did not lose focus.”

Netflix reported $5.3 billion in net income for the first quarter of 2026, up roughly 82.8% from the $2.9 billion it posted one year prior. Revenue grew 16.2% to $12.25 billion. The $2.8 billion termination fee from Paramount Skydance lifted the streamer’s free cash flow to $5.1 billion, prompting Netflix to raise its full-year 2026 free cash flow forecast to $12.5 billion, up from the previous $11 billion projection.

Sarandos said the company built up its “M&A muscle” while crafting the bid and working with regulators to secure approvals. One key benefit of the process was that executives tested their “investment discipline, and when the cost of this deal grew beyond the net value to our business and to our shareholders, we were willing to put emotion and ego aside and walk away.”

Netflix also laid out three core strategic priorities in its investor letter, mapping out its plan of action now that the Warner Bros. deal is off the table. The company is focusing on expanding its entertainment offerings, leveraging technology, and improving monetization.

Netflix said it will expand into video podcasts and live events, including the World Baseball Classic in Japan, which drove the single largest day of new Netflix sign-ups in that country. It also plans to use technology to improve its service, highlighting its March acquisition of InterPositive, the AI-powered moviemaking tool created by Hollywood actor and director Ben Affleck.

Netflix is also revamping its mobile viewing experience, with the launch of a vertical video discovery feed planned for the end of April. Its ad-supported subscription tier makes up 60% of all new sign-ups in countries where it is available, and Netflix said it expects to generate $3 billion in ad revenue this year, double its 2025 ad revenue figures.

Peters reaffirmed the company’s financial goals of 12% to 14% revenue growth and an operating margin of 31.5%. He said Netflix’s global audience is approaching 1 billion people, which Peters called “an exciting milestone to strive for” that leaves the company with “plenty of room to grow.” He noted that Netflix’s current market penetration is under 45%.