Chappelle, Dave

The Netflix executive says he — and the company he helped build — will survive a bout of bad earnings numbers.Maybe it was the tower of seafood sitting before us. Or the Potomac River flowing next to us. Or the fact that Ted Sarandos proposed to his wife, Nicole, on a “touristy booze cruise” under Fourth of July fireworks right in front of where we were sitting on the Georgetown waterfront in Washington.Whatever the reason, the Netflix co-C.E.O. had seafaring adventures on his mind.When I asked Mr. Sarandos how it felt when Netflix lost $54 billion in the blink of an eye on a single bad stock-market day in April, he talked about reading Joseph Conrad’s novella “Typhoon,” once as a younger man and again recently.The first time, he considered the captain who steered straight into the eye of a typhoon in the Pacific Ocean “a terrible leader” who “made a mistake and got people into a very bad situation.” But reading it a couple of decades later, Mr. Sarandos saw the complexity of leadership it takes to get through the storm, as the captain summons all his willpower to dominate a superior force.In this metaphor, the streamer is the steamer, which, Conrad writes, is lurching and pitching and going sideways in the gale “as if taking a header into the void.” And Mr. Sarandos is the skipper who has to swiftly steer the company out of danger, after the stunning news that Netflix lost 200,000 subscribers in the first quarter of this year — without spending too much time rehashing how they got there.“We make decisions based on the best information we have at the time,” the 57-year-old said. “They are not always going to be right, but how you help navigate the outcomes, and the urgency you bring to it, is what gets folks through the storm. And the storms will come.”He recalled the Netflix squall of 2011, when Reed Hastings — the founder who now shares the C.E.O. job with Mr. Sarandos — created a separate company, Qwikster, to handle the DVD business. The move helped accelerate an already falling stock price, culminating in a 75 percent drop.“It was horrifying, disappointing and embarrassing,” recalled Mr. Sarandos, who was then the chief content officer. But he feels that they spent too long “sunshining,” to use the Netflix argot for openly examining failures. “How much time do you spend licking your wounds?” he said, adding: “Let’s have that burned into our memory, but we’ve got to move on and move fast.”He conceded that during the pandemic, when Netflix was Icarus, “there were probably a lot of underlying things in the business” that they could have gone “much deeper” on and been “more curious about if we weren’t doing so well.” (The company added 10 million subscribers in the first three months of the pandemic alone.) He added, “We could have been much more questioning of the success and saying, ‘Are you sure?’”It is certainly a wild plot twist worthy of Hollywood: The swaggering company that revolutionized the way Hollywood does business has stalled, with its stock down over 70 percent over six months.The Netflix Lobby MetricOver a three-hour dinner, Mr. Sarandos was charming and upbeat, dressed down in Levi’s and sneakers. You would never know he had been through a Job-level run of bad fortune in the last few months. First, his father, with whom he was very close, died. Soon after, his mother-in-law, Jacqueline Avant, with whom he was also very close, was shot to death when she encountered a burglar in the middle of the night at her Beverly Hills home. Ms. Avant, renowned in Hollywood for her elegance, art collecting, philanthropy and community organizing in Watts, Calif., was the wife of Clarence Avant, a music mogul known as the “Black Godfather.”Then, on top of Mr. Sarandos’s personal woes, Netflix skidded from rapid growth to grind-it-out. (Its stock peaked above $700 a share in November 2021 and has now fallen below $200.)The rise of Mr. Sarandos, a community college night-school dropout, from a video store clerk in Arizona to the pinnacle of Hollywood, is legendary.“He’s had more singular influence on movies and television shows than anyone ever had,” Barry Diller told me. “He has denuded the power of the old movie companies that had held for almost 100 years. They are now irrelevant to setting the play and rules of the day. If there is still a Hollywood, he is it.”Only a few years ago, the Netflix lobby was the coolest place on earth. Now it’s suddenly gloomy. In her “Saturday Night Live” monologue last weekend, Natasha Lyonne, the star of Netflix’s “Russian Doll,” sarcastically cracked that the “two things you definitely want to be associated with right now are Russia and Netflix.”After winning the pandemic, Netflix now finds itself in its own version of its survival drama “Squid Game.” The company hit a ceiling, for now, of some 220 million subscribers, after thinking it could get to a billion with its global empire, and that has thrown a wrench into the future of Netflix and streaming in general. Wall Street suddenly turned a cold shoulder on its former darling, telling Netflix, Guess what, guys, you’ve got to make money, not just grow subscriptions.The company recently announced 150 layoffs, with more sure to come; shows in development, even by big names and a certain Montecito royal, are being dropped. Mr. Sarandos talked about the advertising option, something the company had resisted, so if people want a lower price subscription with ads, they could have it. “For us, it was all about simplicity of one product, one price point.” But, he said, “I think it can now withstand some complexity.”The Netflix hit “Squid Game.”Netflix, via Associated PressAnd how did Hollywood react to this bad news? With a blast of glee. Mr. Sarandos and Mr. Hastings, unassuming men of enormous chutzpah and vision, are being dunked in a vat of schadenfreude, subjected to the sort of vicious backbiting that characterized “House of Cards,” the David Fincher show that helped propel the network to success. As one Hollywood savant said with a shrug, “Nice doesn’t play in this town.”Old-school Hollywood types privately celebrated the news that the new streaming services they had scrambled to create (like HBOMax, Disney+ and NBC’s Peacock) were now disrupting the disrupter. Netflix is a victim of its own success; Ted and Reed pointed the way, but now they have to share their dog bowl. And during inflationary times, people are going to cut back on the number of streaming services they have.Until just recently, Netflix seemed too big to fail, even too big to hate — although some did, anyway. Backed by an ebullient Wall Street, the company was able to outmoney everyone, spending exorbitant sums, poaching talent and executives and muscling into Oscar campaigns with its “Monopoly money,” as one disgusted competitor called it, or “drunken sailor spending,” as another said.“We were trying to build a library to make up for not having 90 years of storytelling,” Mr. Sarandos said.Once talent gorged on Netflix money, like geese destined for foie gras, some became cranky.“Everything was completely amazing up until it wasn’t,” said Janice Min, the C.E.O. of Ankler Media, whose buzzy newsletter circulates through Hollywood C suites. “It’s hard to destroy the ecosystem and try to become king at the same time.”Netflix was an occupying army. “It was Vichy Netflix in Hollywood for the past decade,” Ms. Min said, “where the whole town was forced to adopt their customs and language. Now the traditionalists believe that the interlopers have had a comeuppance.“The schadenfreude set are licking their chops that this is William Holden facedown in the swimming pool. But this is a company that forced Hollywood to move forward 20 years faster than it would have. The burning question in town is, do the executives at the top stay the same now that they’ve hit a massive speed bump?”I asked Mr. Sarandos a version of that question. Could he survive a Keeper Test? (That’s part of the “radical candor,” as it’s called, in Netflix culture, a constant re-evaluation of whether an employee is a star.)“I hope so,” Mr. Sarandos said. “I mean, I think so. We hold each other and the board holds us both to a pretty high bar,” he said, referring to Mr. Hastings. “And I don’t think there’s a place where he’d say, ‘Hey, where’s your accountability for this?’ We’re pretty on top of both the successes and the failures. And if we were not, I think that we would fail the Keeper Test, yeah.”When I asked Mr. Hastings if Mr. Sarandos would pass, he was brisk: “Ted has passed the Keeper Tests for the last 22 years.” The big picture, he said, is that Netflix “is continuing to have some of the most popular shows in America and around the world. We can always pick it up and, you know, we want to do that.”Despite his low-key manner and folksy expressions like “holy moly,” Mr. Hastings is perfectly capable of icing anyone, if he decides it’s in the best interest of the company. He does not think of employees as family, but as a sports team that has to win trophies. Mr. Hastings fired one of his best friends and original employees, Patty McCord, the human resources chief. They drove to work together and she helped him create the controversial culture.I’m also curious about the future of Mr. Sarandos’s top executives, Scott Stuber, the head of the film division, and Bela Bajaria, who oversees original content. So I press, referring to all of the top brass generally: “So, you don’t think any heads are going to roll?”“Um, the way we are organized, no one gets to make that assumption,” Mr. Hastings said. “Everyone has to continue to raise their game throughout the company.”He continued: “I would say we are always reaching for the highest performance, but our content is not why the current slowdown is happening.”‘Everything’s Not Going to Be for Everybody’Mr. Sarandos loves comedy, something that was his North Star when he found himself smack in the middle of the culture wars. There was a backlash last year to Dave Chappelle’s Netflix special, “The Closer,” over his jokes about transgender people, and some Netflix employees walked out of the Los Angeles headquarters in protest.But Mr. Sarandos said that, while he was taken by surprise at the kerfuffle, he did not agonize over supporting Mr. Chappelle. He said that the only way comedians can figure out where the line is, is by “crossing the line every once in a while. I think it’s very important to the American culture generally to have free expression.”He continued: “We’re programming for a lot of diverse people who have different opinions and different tastes and different styles, and yet we’re not making everything for everybody. We want something for everybody but everything’s not going to be for everybody.”Netlix employees and activists protest the company’s handling of the Dave Chappelle controversy outside the company’s headquarters.Mark Abramson for The New York TimesHe said he believes this deeply, so his decision about Mr. Chappelle “wasn’t hard in that way. And rarely do you get the opportunity to put your principles to the test,” he said. “It was an opportunity to take somebody, like in Dave’s case, who is, by all measure, the comedian of our generation, the most popular comedian on Netflix for sure. Nobody would say that what he does isn’t thoughtful or smart. You just don’t agree with him. ”Mr. Chappelle was attacked onstage in May at the Hollywood Bowl during the “Netflix Is a Joke Festival,” by a man who said he was “triggered” by the comedian’s jokes about the L.G.B.T.Q. community and homelessness. Days later, Netflix released a new corporate culture memo, which had been workshopped among company employees for six months, and attracted 10,000 comments. The memo underscored Mr. Sarandos’s response: “If you’d find it hard to support our content breadth, Netflix may not be the best place for you.”Conservatives celebrated. “Netflix Puts Its Woke Employees On Notice With Blunt Memo,” read a Daily Caller headline. When I asked Mr. Sarandos how he felt about turning into a conservative hero, he said, “It used to be a very liberal issue, so it’s an interesting time that we live in.”He added, “I always said if we censor in the U.S., how are we going to defend our content in the Middle East?”After the Ricky Gervais comedy special went up on Netflix Tuesday, a similar brush fire started about his transgender jokes, with Variety’s Daniel D’Addario writing a story headlined “Ricky Gervais Anti-Trans Special Proves Netflix Is On No One’s Side But Its Own.” I asked Mr. Sarandos about it. He said his remarks about Mr. Chappelle applied to Mr. Gervais.‘Are You the Netflix Guy?’In a town where executives and especially agents are often illiterate about the history of TV and movies, Mr. Sarandos is an unabashed fan. He told me that if he had a free day to do anything, he would watch a movie in the nine-seat screening room in his house, converted from a guest bedroom. The Netflix honcho can wax eloquent on the great shows he’s watching on HBO Max, Showtime, Disney+ and Peacock just as easily as the ones he loves on Netflix.Asked who would be at his dream dinner party, past or present, he said Ernie Kovacs, Carole Lombard, Orson Welles, Mel Brooks and Norman Lear. “I used to see the words ‘Created by Norman Lear’ so often, I didn’t think it was a real person,” he said. “I thought it was like ‘In God We Trust.’” One of the “blessings” of his life, he said, is that he has met many of his idols.“That thing about ‘Don’t meet your heroes,’ I think that’s silly,” he said. “The first time I got to go to the Oscars, we were sitting directly behind Francis Ford Coppola, and I was, like, giddy. So I tapped Nicole and whispered to her, and she goes ‘You’re a terrible whisperer, you know that?’ So the first break comes and he turns around and says, ‘Are you the Netflix guy?’ That was pretty wild.”Mr. SarandosDevin Oktar Yalkin for The New York TimesHe fell for the 54-year-old Nicole, a film producer who started in the music industry and Democratic politics, the night he met her at an event for Barack Obama in Los Angeles in 2008. She was the Southern California finance co-chair for the Obama campaign and became President Barack Obama’s ambassador to the Bahamas. Mr. Sarandos said he knew she was the one after she showed her chops on old movies such as “Now, Voyager” and “Cabin in the Sky,” with Lena Horne and Louis Armstrong, and documentaries like “Eyes on the Prize,” about the American civil rights movement.His wife said his belly laugh, his “authentic” kindness, his desire to live life to the fullest and the fact that he’s a “really good egg” who jumps out of his car to help a motorist in trouble without thinking twice, are the reasons she fell in love with him. It certainly wasn’t his old Banana Republic jacket. (She upgraded him to a navy Brunello Cucinelli suit one Christmas.) Or his 1996 Acura MDX with the tear in the seat. (As a birthday gift to Nicole, he said he “put it out of its misery” and traded it for a 2016 black Porsche Cayennne S.U.V.)“I was never drawn to this for the trappings,” he said.Of the tragedy they went through with her mother, while Mr. Sarandos was still grieving his father, Ms. Avant said, “It would have torn many families apart. But Teddy doesn’t deflect. He sees a tragedy or crisis, takes it in and says ‘We are going to get through this.’ That’s what I love about him. He’s the calm in the storm.”Mr. Sarandos grew up in a lower-middle-class home in Phoenix in a family of five with young, “hippie Catholic” parents. His father was an electrician. “They started having kids at 17,” he told me. “Neither finished high school. My dad had this philosophy that if there’s leftover food, you could have more kids, I guess. My memories of growing up in that house are that it was chaotic all the time. Nothing was ever on a schedule. We didn’t have a bedtime. We didn’t have a dinner time.”He said TV gave him structure, and he dreamed of going up onto the screen, “The Purple Rose of Cairo” style, to be part of the Cunningham family on “Happy Days.”Ted Sarandos and his wife, Nicole Avant.Mario Anzuoni/ReutersThe utilities and phone would often be cut off, he said, but his mother always made sure they had cable TV and she got a V.C.R. and a little dish on the roof to get HBO.“It was this crazy luxury for a family who could barely afford to keep the lights on,” he told me. Somehow, he thinks, his late mother had a vision for his future.The family didn’t go to movies unless it was a drive-in because his father couldn’t go two hours without a smoke. Their cultural high point was going to see Frankie Valli and the Four Seasons every year at the Arizona State Fair.When things got crazy at home, he went to his grandmother’s and it was “paradise.” “It was very structured, very calm,” he said. “She would watch a lot of TV, and she had all the magazines about movies. She always called movie stars by their first names like she knew them, like Mac and Glen for Mac Davis and Glen Campbell. They were friends, and I don’t know who stole whose wife but it was a very big deal for her.”And then, he said, “the universe” offered up the second video store in the state of Arizona around the corner. “When I walked into that store, it was a life changer,” he said. He worked his way up from clerk to managing eight video stores to one of the top jobs for West Coast Video, which at its peak had nearly 500 stores.‘It’s Not Like We Invented the Bidding War, You Know’Netflix resentment has been simmering for a while. Speaking in 2019 at CinemaCon, Helen Mirren told the crowd, “I love Netflix,” but then she flung a vulgarity at the streaming service, adding “There’s nothing like sitting in the cinema.”“She sent an immediate apology text,” Mr. Sarandos told me, smiling. “I think she was caught up in the moment. I mean, you’re talking to a roomful of small theater owners who were feeling they were under assault.”He said he understands “why people would be snickering a bit” now and notes: “Remember, I was in a business that was totally disrupted, too. I was in the video rental business.”Mr. Sarandos became so conversant with the 900 videos in the video stores he ran that he was the pre-algorithm, able to recommend films to people based on what they had previously watched.“I’ve always and I continue to be a very optimistic watcher,” he said. “I hardly ever turn off anything I’m watching because I think the good parts are coming.”As Ms. Min said, “Ted may be the only executive who has come within a million miles of an actual consumer of entertainment during his career.”Netflix’s co-CEOs, Reed Hastings and Ted Sarandos.Ahn Young-Joon/Associated PressMr. Sarandos is philosophical about the town vibrating with joy at his troubles. “Nobody wants to have their foundations challenged or their conventions challenged and we definitely did all that.” He points out that it is, after all, a very competitive business. “It’s not like we invented the bidding war, you know.”Maggie Gyllenhaal, whose movies “Kindergarten Teacher” and “The Lost Daughter” were acquired by Netflix, evokes the Medicis in the way Netflix supports art that might get lost, art that is dark and painful to watch. “Not once was I pushed to make a change I didn’t want to make,” she said.Mr. Sarandos said that when he met Reed Hastings in 1999, he was driven by the desire to help great storytellers reach people around the world.“There were some movies that never came to Phoenix, and it always made me crazy,” he said. “I thought that video rental never really solved the promise because it just became a repeat of the same distribution problem, very hit driven.”Mr. Sarandos often brings up the idea of democratization. “Netflix did diversity and inclusion better than anyone in Hollywood ever had or will,” Ms. Min said. “One of their first shows was ‘Orange Is the New Black,’ a female prison drama, with a transgender character, that no one would touch.”When I talk to other executives and talent around town, they have glowing things to say about Mr. Sarandos behind his back.“It sounds so boring but this guy is incredibly friendly, kind, gregarious and warm,” said Jason Bateman, the star of Netflix’s “Ozark.” “If Marty Byrde were to describe him, he might say, he has all the power of a cartel boss and none of the frown.”Many rivals do question Netflix’s business model, which they think was overvalued by Wall Street and outran financial logic for a long time. Some say royalties have been replaced by front-loaded, bloated contracts, making flops all the more costly and obscuring creators’ ability to see just how successful their works are. Those rivals wonder if the quality of Netflix’s content needs upgrading — given that it made 70 movies in 2021 — so that, as one rival executive put it, they have filet at the buffet as well as vegetables and mashed potatoes.“Tiffany’s became a Sears overnight,” sniffed one Hollywood player who has dealt with the company.And they wonder about the wisdom of writing gazillion-dollar checks to sign up celebrities with no filmmaking experience, like the Obamas and Prince Harry and Meghan Markle, who were given producing deals. (Barack Obama is also signed up to narrate a National Geographic-style nature documentary.)“You have to bet early on storytellers,” Mr. Sarandos said. My experience with Barack and Michelle is they are phenomenal storytellers.”But Netflix is not going forward with Meghan Markle’s cartoon show about a 12-year-old girl, “Pearl.”How does it feel to drop a semi-royal?“We’re all optimistic when we go into these projects,” Mr. Sarandos said, “and sometimes they do or don’t materialize.”What’s So Bad About Being CBS?Mr. Sarandos’s 2020 decision to oust Cindy Holland, his vice president of original content who had developed expensive hits like “House of Cards,” “Orange Is the New Black,” “Stranger Things,” “The Crown” and “The Queen’s Gambit” and signed off on big checks — $100 million to Shonda Rhimes (recruited by Mr. Sarandos) and $300 million to Ryan Murphy — continues to rankle in some quarters. Ms. Holland was seen as an exemplar of more curated chic and less mass appeal, and as Kim Masters wrote in The Hollywood Reporter, she clashed with Mr. Sarandos about the demand for ever more volume, the lavish Oscar campaigns and giving Mr. Chappelle more specials.Mr. Sarandos said that he and Ms. Holland got the business to where it was, but he wanted to give Ms. Bajaria, formerly Netflix’s head of unscripted and international content, the top slot because she had international experience, which he thought could help the company to grow. She also had a gift for picking hits like “You.”Some rivals contend that Netflix started out boldly but then became Walmart or CBS, with too much “Emily in Paris” and not enough “Stranger Things.”The Netflix hit “Emily in Paris.”Netflix, via Associated Press“CBS is one of the most successful TV networks in history,” Mr. Sarandos responded imperturbably. “So, yeah.” He also thinks “Emily in Paris” is high-quality television, adding “Peyton Manning goes on ‘S.N.L.’ and is talking about ‘Emily in Paris.’”“We’re trying to satisfy multiple tastes,” he said. “This year, we had two best picture nominees, ‘Power of the Dog’ and ‘Don’t Look Up,’ and they couldn’t be any more different.”And he brags about “Squid Game,” which he calls “the biggest entertainment story in a century.” He said his team in Korea found the story, which had been pitched as a movie for 10 years, and asked the creator to conceptualize it as a series.“This is where the algorithm is your friend,” he said. “The algorithm is an advocate for the audience trying to find that thing you never heard of that you’re going to love. And it kept recognizing very quickly that this thing was happening in Korea and ‘Oh, my God, it’s happening in Japan.’ ‘Oh, it’s happening in France.’”He’s sanguine that Netflix hasn’t hit its ceiling. After all, according to Nielsen, streaming accounted for a little more than 30 percent of TV viewership in the United States in April. Netflix had the most viewers of any streamer, but accounted for just 6.6 percent of all TV viewership in the United States.One way that Netflix will keep growing, Mr. Sarandos said, is that the company will work to tighten password control, or figure out a way people can pay to share their password. “About a third of American households are borrowing the password to someone else’s account,” Mr. Hastings said.Mr. Sarandos doesn’t agree with criticism that Netflix needs to stop greenlighting so many projects and embrace a more selective approach, even though, as Scott Galloway, a tech guru and New York University marketing professor, said dryly, “They’re spending the defense budget of Sweden on content.” (Actually, Netflix spends far more. Sweden spent about $7 billion on defense in 2021, and Netflix said it spent $17 billion on content that year.)“I don’t think that we’ve done anything so willy-nilly that we should rethink it,” Mr. Sarandos said, adding: “While many competitors and pundits talk about volume being a negative, I think it is a tremendous positive for consumers who all have a different view of what ‘quality’ is. I think that, while they kick us around about it, they are starting on the same path — HBO with Discovery programming on the same shelf, Disney broadening their brand with Fox content, and even FX’s radical expansion of output to 22 shows.”Does he think that Netflix not diversifying its revenue strategy has exacerbated recent obstacles?“I think it’s the trade-off of simplicity and complexity,” he said. “And to do what we did in the last 10 years, I think we benefited much more from simplicity.”Many artists at Netflix are happy to defend the company in this moment of churn.“Decisions are not made by an algorithm,” said Guillermo del Toro, who is making “Pinocchio” for Netflix. “What’s really important about Ted is that he’s in the room, not just his body. He’s completely engaged with you.”Jerry Seinfeld waves off the schadenfreude. “People are just yapping away at their lunches, like they always do,” the comedian said. “They come after you if you’ve got the ball. Ted’s got the ball.”Shonda Rhimes, flush with “Inventing Anna” and “Bridgerton” success, is rosy about the future: “I live in this space and I wouldn’t bet against Netflix.”“Ted Sarandos and Reed Hastings are A-Rod and Barry Bonds,” Mr. Galloway said, adding that while they may have been beaned in the face, “You don’t want to bet against these guys.”Mr. Sarandos, of course, is optimistic. “We’re 90 years behind all of our current competitors in what we do today, and they’re just entering into our space,” he said. “We have to have content that people like better on Netflix than anywhere else. I know it seems like it should be more complicated than that, but it almost isn’t.”Mr. Sarandos.Devin Oktar Yalkin for The New York TimesConfirm or DenyMaureen Dowd: You were a better video store clerk than Quentin Tarantino.Ted Sarandos: I don’t know how great a video store clerk he was, but I was probably nicer to the customers who forgot to rewind the tapes.If media executives recreated “Squid Game,” Rupert Murdoch would be the guy who tricks everyone, Reed Hastings would be the frontman, and Bob Chapek would get killed in the first round.(Laughing) Plausible. And you could scramble them in any way.Let’s play MFK (Marry, “Fornicate,” Kill): Hulu, HBO and Disney+.I would say “M” all three and I would “F” all three. The jury is out on “K.”Barack is much more fun to party with than Michelle.Deny.You named your son after Tony Bennett long before you met him.That is true. Anthony Bennett Sarandos. Tony is an unbelievable singer, obviously, but also a civil rights activist, a great painter, a super-well-rounded human being. We got to be good friends and one day, Tony goes “Why would you name your kid Tony Bennett?” I go, “Well, first of all, I never thought I’d have to explain it to you.”After the Netflix subscriber news broke, you turned on Merle Haggard’s hit “I Think I’ll Just Stay Here and Drink”I’m a huge fan.Executives at media companies make too much money.No comment. More