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Netflix lists net neutrality demands to FCC amid mixed Q2 earnings

Netflix also has some ambitious goals for the third quarter, propelled by recent international launches in Europe and South America.
Written by Rachel King, Contributor on

The Federal Communications Commission closed the forum for the first round of public opinion on net neutrality last week, but Netflix hasn't abandoned its soapbox just yet.

CEO Reed Hastings has been a vocal proponent for an open Internet without restrictions, or "artificial slow lanes," for delivering select types of traffic on broadband channels.

The online video giant's founder reiterated those sentiments as well as a few "goals," or even demands, to the FCC amid Netflix's mixed second quarter earnings report published on Monday after the bell.

In a memo signed by Hastings and CFO David Wells, Netflix leaders wrote:

Our focus on strong net neutrality, including interconnection, is about preventing large ISPs from holding our joint customers hostage with poor performance to extract payments from us, other Internet content firms, and Internet transit suppliers such as Level 3 and Cogent.

Our policy goals are for the FCC to not sanctify paid prioritization, and for the DOJ/FCC to block the merger of Comcast/TWC, or at the very least, to require as condition to approving the merger that the combined entity be prevented from charging for interconnection.

The Los Gatos, Calif.-based company reported a net income of $71 million (statement). Non-GAAP earnings were $1.15 per share on a revenue of $1.34 billion.

Wall Street was expecting earnings of at least $1.16 per share on a revenue of $1.33 billion.

Nevertheless, Netflix earnings started to climb in after-hours trading given that earnings more than doubled from the same quarter last year despite not squarely hitting the analyst target.

Netflix also netted approximately 1.69 million new subscribers during the quarter, bringing the worldwide grand total of current monthly subscribers to 50.05 million.

Netflix has ambitious plans for the following quarter, projecting to add 3.69 million more subscribers over the following three-month period for an approximate grand total of 53.74 million globally.

Both Q2 and Q3 user count growth is being propelled by international expansion. Feeding off successful launches in Finland and Argentina, Netflix is moving into Germany, France, Austria, Switzerland, Belgium, and Luxembourg in September.

Also looking ahead, analysts expect Netflix to deliver Q3 earnings of $1.06 per share on a revenue of $1.38 billion.

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