Netflix employees and activists are set to stage a walkout at the company’s Los Angeles headquarters on Wednesday, in a reputational blow to the company that has upended Hollywood by luring talent with a creative-friendly ethos and large paycheques.
Over the past few weeks the streaming group has suffered the most high-profile internal backlash in its history after employees spoke out against transphobic comments made by comedian Dave Chappelle in a Netflix special titled The Closer.
Ted Sarandos, co-chief executive of Netflix, last week emailed roughly 150 senior staff defending the segment, pointing to the importance of Chappelle to the company. “Chappelle is one of the most popular stand-up comedians today, and we have a long standing deal with him,” he said.
Chappelle’s hour-long special made frequent mocking references to transgender people and other members of the LGBT+ community. He defended the position of trans-exclusionary radical feminists (“Terfs”), a group that argues that gender is assigned at birth and cannot be altered, while comparing trans identities to the wearing of blackface.
Netflix quickly faced blowback from its own employees in addition to human rights organisations, activists and some of its top talent. Comedian Hannah Gadsby called Netflix an “amoral algorithm cult”, while Dear White People showrunner Jaclyn Moore said she was “done” with the company.
A former senior Netflix executive said the crisis was part of the “ongoing story of Silicon Valley versus Hollywood”, as Netflix has shaken up the television and film business with its emphasis on data and algorithms.
“This is the robots versus creative, sensitive people,” said the executive. “Netflix tries to codify everything. Reed [Hastings, co-founder] sets extremely high ideals, and can you really live up to all those ideals as you keep growing?”
Netflix employees are planning a virtual work stoppage on Wednesday, while activists have organised a rally at Netflix headquarters on Sunset Boulevard, with a list of demands for Sarandos.
As tensions have swelled, Netflix employees have leaked to the press both the chief executive’s internal memos and sensitive financial information — an unprecedented rebellion against a company that has prided itself on progressive values and creative freedom.
“Netflix does this under this tech banner of ‘this is about freedom of information and we’re not going to stand in the way of artists’,” said another former executive. “It has almost been a competitive edge to cable television, because [streaming] wasn’t held to the same standards.”
Hastings has made transparency a core part of the company’s unconventional corporate culture, sharing financial information and company salaries widely. The strategy was previously validated by loyalty among staff. “The financial world sees this as reckless. But the information has never been leaked,” Hastings wrote in a book released last year.
But employees in the past week have shared sensitive information about how Netflix assigns a dollar value to a television show, a question that has mystified Wall Street over the years. Netflix spent $24m to make Chappelle’s The Closer, more than the $22m it cost to make the Korean TV series Squid Game, which went on to far greater viewership, according to Bloomberg figures that were confirmed by the Financial Times. Netflix last Friday said it had fired an employee for leaking documents to the media.
Netflix in 2018 hired British public relations executive Rachel Whetstone to lead its global communications. In the past month, senior communications executives in the US and the UK have exited the company.
The backlash is the first reputational blow in some time for Netflix, which has attracted some of Hollywood’s most talented executives and creatives with the promise of enormous paycheques and creative freedom. Some workers’ salaries were doubled or tripled from their previous employment; others were given raises in the hundreds of thousands of dollars overnight.
Another former executive described the crisis as “inevitable”.
“What has kept this from happening before is that they pay everyone so much,” said the former employee. “You’d be hard-pressed to find a salary under $100,000 at Netflix. I’ve never seen leaks like this, but now the floodgates are a little open.”
Netflix is unlikely to face near-term financial consequences over the matter. Its stock has climbed more than 20 per cent in the past two months as investors cheered the success of Squid Game, which has become the group’s most popular show ever. Netflix doubled its net new subscribers in the third quarter to 4.4m, exceeding forecasts.
However, the controversy has put pressure on Sarandos, Netflix’s most prominent face in Hollywood, who last Wednesday sent a second internal memo reaffirming his stance on Chappelle.
“Adults can watch violence, assault and abuse — or enjoy shocking stand-up comedy — without it causing them to harm others,” he said. “While some employees disagree, we have a strong belief that content on screen doesn’t directly translate to real-world harm.”
Critics were quick to point out that 44 transgender Americans were murdered last year, according to the Human Rights Campaign, the highest since the group started tracking in 2013.
Late on Tuesday night ahead of the walkout, Sarandos tried to offer a mea culpa, stating that he had “screwed up” with internal communications, but continuing to defend the Chappelle programme.
“This group of employees felt a little betrayed because we’ve created such a great place to work that they forgot that sometimes these challenges will come up,” he told the Hollywood Reporter.
But the comments appeared to stoke the fire further. “We didn’t forget shit,” Terra Field, a transgender Netflix engineer who was suspended last week for crashing a virtual company meeting uninvited, posted on Twitter. “Stop patronizing us.”