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Netflix is valued like a tech company, but its CEO just said it was a media company

Key Points
  • Netflix CEO Reed Hastings argued that his company is more of a media company than a tech company because it spends most of its money on content, Recode reported.
  • Many of the other big tech firms have resisted labeling themselves as media companies and instead opted for the label of "platform."
  • Hasting's response came after Recode asked about the role U.S. lawmakers should play in regulating tech companies.
Reed Hastings attends Reed Hastings panel during Netflix 'See What's Next' event at Villa Miani on April 18, 2018 in Rome, Italy.
Getty Images

Netflix CEO Reed Hastings broke with his big tech peers Monday when he argued the company is actually more of a media operation than a tech one, Recode reported.

Many of the other big tech firms have resisted labeling themselves as media companies and instead opted for the label of "platforms" where users supply the content. Facebook CEO Mark Zuckerberg, for example, has repeatedly made the distinction between his company and traditional media firms. In 2016, he said, "We build the tools, we do not produce any content," according to Reuters. (Facebook does pay to produce some original programming for its Watch video product.) Some have argued that the distinction allows tech firms to abdicate responsibility for the content it hosts and promotes.

But as regulators and politicians have turned their eyes toward tech companies, Hastings has taken a decidedly different approach in calling Netflix a media company.

"[W]e're really mostly a content company powered by tech," Hastings said, since the company spends $1.2 billion on technology and about $10 billion on video programming.

Investors have generally treated Netflix like a high-growth tech company, giving it a market cap of about $157 billion on annual revenue of $15.8 billion and net income of $1.2 billion in 2018. By way of comparison, Disney is valued at roughly $169 billion on annual revenue of $59.4 billion and net income of $12.6 billion in its fiscal year 2018.

Hastings' response came after Recode asked about the role U.S. lawmakers should play in regulating tech companies when it comes to privacy and antitrust. Democratic presidential contender Elizabeth Warren, a senator from Massachusetts, called out Netflx's FAANG peers — Facebook, Amazon, Apple and Google — in her plan to "break up Big Tech." If seen as a media company, Netflix could have a chance of avoiding the limelight as more presidential candidates are forced to take a stance on big tech regulation.

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