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Why Netflix Hired Expensive CFO

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Jan. 10 2019, Published 9:41 a.m. ET

Netflix lines up $10 million compensation for new CFO

Netflix (NFLX) recently hired Spencer Neumann as its new CFO. Neumann was most recently CFO of videogame maker Activision Blizzard (ATVI). Prior to joining Activision, Neumann was a longtime Walt Disney (DIS) executive. Netflix is planning to pay Neumann a total of $10 million in annual compensation, almost double the compensation of its most recent former CFO David Wells, the Wall Street Journal reported.

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Netflix braces for Disney

To decide to pay Neumann almost twice as much as what it paid its former CFO, Netflix must be placing a high premium on this executive. And for good reason. First, Neumann was a long-time Disney executive. Disney is in the process of launching a video service that will challenge Netflix. Therefore, Netflix is adding an executive who not only has many years of experience but who also understands the workings of its upcoming fierce rival, which could help it brace properly.

Revenue jumped 34%

Netflix has hired a new finance chief with a huge price tag at a time when the company is also expected to step up investment in content production to stand out from the competition and replace lost content. Disney, for instance, is pulling its movies from Netflix to offer them on its own video service. Netflix’s content licensing opportunities may also narrow as 21st Century Fox (FOX) sells its studio business to Disney and AT&T (T) expands its video streaming business after acquiring Time Warner alongside its production operations.

Netflix estimated it could spend as much as $8.0 billion on content production and licenses in 2018.

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