Netflix Investigated For CEO Facebook Posts
It seems that after a great start to 2012, Netflix the on-demand media streaming service has been hit with problem after problem. Netflix are currently being investigated by the SEC, for a post that CEO Reed Hastings had made on his public Facebook page in June.
So what was all the fuss about then? Apparently the issue was surrounded a post in which the CEO, Hastings, had commented on the facts that Netflix users has watched more than 1 billion hours of video in June.
His full post read: “Congrats to Ted Sarandos, and his amazing content licensing team. Netflix monthly viewing exceeded 1 billion hours for the first time ever in June. When House of Cards and Arrested Development debut, we’ll blow these records away. Keep going, Ted, we need even more!”
So Why Investigate?
The post, as expected, was spotted by a number of news outlets and Netflix stock rose that day. However, the company had violated Reg FD (Regulation Fair Disclosure) which was set out to provide equal access to material information among all investors.
So if Reed Hastings and Netflix had published a Press Release then this issue could have been avoided.
The Battle of Hastings
After this stage, Reed decided to defend his actions on Facebook in a post that questioned the SEC investigation.
He stated: “First, we think posting to over 200,000 people is very public, especially because many of my subscribers are reporters and bloggers.
Second, while we think my public Facebook post is public, we don’t currently use Facebook and other social media to get material information to investors; we usually get that information out in our extensive investor letters, press releases and SEC filings. We think the fact of 1 billion hours of viewing in June was not “material” to investors, and we had blogged a few weeks before that we were serving nearly 1 billion hours per month.
Finally, while our stock rose the day of my public post, the increase started well before my mid-morning post was out, likely driven by the positive Citigroup research report the evening before”.
We will see if this gets cleared up anytime soon!