Netflix president faces US fine over Facebook boast
Published 08/12/2012 | 05:00
Reed Hastings took to the social media site in early July to congratulate staff for a job well done, and hailed the one billion hours of video that subscribers watched the previous month.
But in an unfortunate twist, the US Securities and Exchange Commission (SEC) – the federal watchdog regulating the US electronic securities markets – warned it was considering taking action, claiming that he had not complied with full disclosure rules.
The SEC requires companies to make full and fair public disclosure of material non-public information.
Netflix, which also operates in Ireland, received what is known as a Wells Notice from the SEC, which means its staff will recommend the full commission pursues either a cease-and-desist action or a civil injunction against Netflix and Mr Hastings over the alleged violation.
But Mr Hastings appeared to stand by his decision to post the information on Facebook.
"We think posting to over 200,000 people is very public, especially because many of my subscribers are reporters and bloggers," he said in a statement.
And in a public letter to shareholders, submitted alongside a regulatory filing citing receipt of the Wells Notice, he said he remained optimistic that the matter can be cleared up quickly through the SEC process.
Netflix's stock jumped from $67.85 (€52.46) a share on July 2, the day before Hastings' post, to $81.72 (€63.18) on July 5.
On July 25 its stock fell 22 pc to $60.28 (€46.61) when the company reported that second-quarter earnings fell from $68.2m (€52.7m) a year earlier to $6.2m (€4.8m) this year.
The US company started its business in Ireland earlier in the year, but it had suffered difficulties with a lack of access to new releases and other high- profile films.
Mr Hastings pledged to be aggressive in the pursuit of the rights for big blockbusters, potentially posing difficulties for Sky.
Netflix streams films and TV shows online. Users pay a flat fee of €7 a month and can play as many programmes and films as they like. (Additional reporting, Reuters)