John Belton of Gabelli Funds reacts to Netflix's fourth-quarter earnings on Bloomberg. He says the top-line numbers look generally healthy, but margin guidance is disappointing. The streaming leader says it plans to increase spending on films and TV shows by 10% in 2026 while forging ahead with plans to buy the studio and streaming business of Warner Bros. Discovery.

California

Netflix has reported continued subscriber growth, surpassing 325 million members, but provided margin guidance that fell slightly short of market expectations. The company announced it will pause share buybacks to accumulate cash for a possible Warner Brothers acquisition, leading to concerns about increased content and acquisition spending.

Analysts noted that Netflix's stock has been in decline, partly due to uncertainty around the Warner Brothers deal and a shift to a more mature growth phase. Despite these challenges, the company projects a doubling of ad revenues this year and sees potential long-term benefits from expanding its content library, though investors are advised to remain patient.

Netflix issues cautious forecast amid WBD saga

John Belton he is a portfolio manager and managing director for growth portfolios over at the belly funds. John and his firm own shares of Netflix. And you take a look at the reaction as we were just discussing with David Joyce. It seems like most investors taking this as a sell the news event as you parse through these numbers. Is that your knee jerk reaction as well. Yeah. Thanks for having me. I mean I think the top line numbers generally look pretty healthy. Good display update on the subscriber number at over three hundred twenty five million. That suggests that 2025 was another pretty solid year for member growth. I think the big disappointment in terms of the numbers is just on the margin guidance. Thirty one and a half percent. I think that adjusts to about 32 percent if my math was correct. If you back out that acquisition related cost number that they flag. So I think that's probably OK but a little bit short of expectations. So you probably have slight negative earnings estimate revisions would be my my first cut at it. And John what we've been talking about since the numbers came out is just the amount of spending that Netflix is going to have to do first when it comes to its content slate. Then you think about this potential Warner Brothers deal which has you know taken a lot of twists and turns. And in their commentary Netflix writes that they are going to pause share buybacks to accumulate cash to help fund that pending acquisition again as an investor. You know are you concerned about the potential spending that they need to commit to here. Well you know I think the pause in the buyback is really no surprise. But I think if we take a step back Netflix is coming off a couple of years where they've really held content spending more or less flat over the last few years. And that's allowed for some pretty sharp margin expansion. I think that content investment cycles for this business are going to kind of ebb and flow and multi-year periods. And we are probably entering a period of slightly higher content investment. But I do think if this Warner Brothers deal closes one of the benefits is going to be a much bigger content library which could in theory mean slower less need to invest so aggressively to grow that library over time. Yeah it's kind of interesting to John. And in the release they talk a lot about how they see Warner Brothers as a complementary to Netflix. You would expect that. But in that context they were also talking about all the competition out there and actually according to them saying that they actually account for less than 10 percent of TV viewing time. And they're basically putting that up against not only the traditional TV companies but also the YouTube's and the other streaming services of the world. I am curious as to whether you think they need to keep up with some of those other folks or whether they can sort of be in their own sort of lane or niche if you will. Well I think that is a sentiment that they've talked about consistently over many years. The fact that they don't just compete with the traditional media companies the cable network companies. They also compete with any content platform that is that is driving customer consumer attention. So they've always competed with social media with YouTube. And I don't think that's any different going forward. Do they need to continue to invest to to keep up with that. There's no nothing different. I think of course they do. But I do think they're carving out an interesting niche as you know something that stands alongside user generated content and it's professional generated content. I think they'll always have that niche and that will always help differentiate them. I am curious that when you look at just the current valuation and we should point out this stock has been on a pretty long downtrend for the last few months. Some of it related to some of the specifics that we talked about today. But I am curious as to what you think sort of arrests that decline. Is it just it gets cheap enough that people come back in. Or is it maybe what we hear on the conference call. And you know about 15 20 minutes time. Yeah. Netflix it's always been a stock where I think the stock has always followed the estimates. And you've had this multi-year really positive estimate revision story driven by you've had a reacceleration in member growth. But more than that you've had this advertising story and a paid sharing story. And so you've had this couple year period where earnings growth has really exploded and you are always going to be entering this sort of more mature phase of the growth cycle. And then along with that comes this Warner Brothers announcement which that's the stock is sort of been in the penalty box a little bit around that. So going forward I think if they can just stabilize fundamentals and show that this advertising story still has legs which I do think this guidance for doubling ad revenues again this year is another big positive in the reason of release. I think that's how this stock gets going again. Return to positive estimate revisions. Right. I mean you mentioned the stock in the penalty box. You think about how it's performed since it last reported earnings in late October. We're talking about a decline of maybe 30 percent. It's certainly if these losses hold going to be greater at the open tomorrow. But when it comes to the Warner Brothers deal I mean is there a number that you have in mind where it just wouldn't make sense for Netflix to bump this up any higher. You know I really want to stay away from talking about that deal for obvious reasons with our firm. But you know I the way I'm thinking about Netflix's stock from from a high level and going forward is yes the stock is derated quite a bit. It's getting to a really attractive valuation. That doesn't automatically mean it's going to be a good stock. But if you can get sort of a continuation and engagement growth continuation and membership growth ad revenues really starting to drive and accelerate a reacceleration in total revenue growth. And on top of that if they end up with this great Warner asset I think it still strikes me as a pretty interesting multi-year story. But investors probably going to have to continue to be patient with this one.

President Trump spoke at the World Economic Forum in Switzerland, addressing European allies as tensions rise over his Greenland demands. Mr. Trump demanded immediate negotiations to acquire the territory and claimed he wouldn't use force. Ed O'Keefe reports.

Davos

Trump vows he 'won't use force' to acquire Greenland

Speaking at the World Economic Forum in Davos on Wednesday, the US president described the self-governing Danish territory as a “piece of ice” that is “part of North America.”

Trump vows not to use force to acquire Greenland

Steve Witkoff says he and Jared Kushner will holds talks with Vladimir Putin in Moscow on Thursday.

Moscow

U.S. special envoy to discuss peace in Ukraine with Russian president

Brooklyn Beckham, the oldest son of David and Victoria Beckham, accused his parents in a social media statement of trying to undermine his marriage and of valuing "public promotion" over family. David Beckham acknowledged the allegations and responded, saying, "they make mistakes. Children are allowed to make mistakes." Adriana Diaz has more.

David Beckham responds as son accuses parents of prioritising image

Authorities dismantled 24 industrial-scale labs and seized around 1,000 tonnes of chemicals used to make street drugs such as MDMA, amphetamine and meth.

Brussels

Europe police seize 1,000 tonnes of chemicals in record drugs bust

Stocks plunged on the first day of trading after President Trump threatened tariffs against European nations that oppose his bid to acquire Greenland. Lauren Hirsch, a New York Times reporter, joins CBS News with more.

Washington

Stocks plunge as global concerns about Trump tariffs over Greenland grows

Prince Harry is testifying in London in a case against a British tabloid for news coverage he says went too far. Elton John, Elizabeth Hurley and several other high-profile people have joined the prince in his civil suit for violations of privacy.

London

Prince Harry testifies in latest lawsuit against British tabloid

President Trump's Greenland demands have already had a negative impact on the economy in the U.S. On Tuesday, all three major U.S. stock indexes dropped over the threat of new tariffs. CBS News business analyst Jill Schlesinger explains what to know.

U.S. stocks sink amid Trump's new tariff threats

Israel's Prime Minister Benjamin Netanyahu says he will join US President Trump's so-called 'board of peace' for Gaza.

Jerusalem

Israeli PM Benjamin Netanyahu joins Trump’s ‘board of peace’ for Gaza

South Korea's Prime Minister Han Duck-soo was indicted for failing to prevent and abetting Yoon's martial law declaration.

Seoul

Ex-South Korean PM Han Duck-soo found guilty of action of insurrection

The man who admitted to killing Japan's former Prime Minister Shinzo Abe in 2022 is sentenced to life in prison.

Tokyo

Man who killed Japan's former PM sentenced to life in prison

Bobi Wine, who is currently in hiding, has alleged widespread fraud during the vote that saw incumbent President Yoweri Museveni win a seventh term in office.

Kampala

Uganda's military chief gives opposition leader 48 hours to surrender

A Barcelona commuter train crashed after a retaining wall fell onto the tracks, killing at least one person and injuring 37 others. The crash in Catalonia came just two days after a separate deadly train collision killed at least 42 people in the country's south and injured dozens more.

Barcelona

One killed in Barcelona train crash, days after Adamuz collision

Since the October 7, 2023, Hamas attack, Israel has sought to ban UNRWA over alleged ties to Hamas, claims the UN denies. DW visited the site as Israeli forces bulldozed the UN agency's compound in occupied East Jerusalem.

Middle East Conflict

Israel demolishes UNRWA headquarters in Jerusalem

Global stocks fell after U.S. President Donald Trump made new threats to take Greenland by force during a long press conference. Asked how far he’d go, Trump replied, ‘You’ll find out.’ The threats came just hours after he shared an AI-generated image of both Canada and Greenland covered in the U.S. flag.

Greenland Stand-Off

Markets plunge, allies rattled after Trump's new Greenland threats

The Syrian government has announced a four-day ceasefire with the Kurdish-led Syrian Democratic Forces, following renewed fighting in the north. The SDF says it will abide by the truce. The government says the ceasefire will give time for the SDF to find ways to integrate the northeastern province of Hasakah.

Damascus

Four day ceasefire announced in Syria, Hasakah future to be discussed

French President Emmanuel Macron on Tuesday said the European Union should not bend to 'the law of the strongest.' He told the World Economic Forum in Davos, Switzerland, that it was staggering that the EU was having to contemplate using its 'anti-coercion instrument' against the U.S. (Macron is wearing dark glasses because of an eye condition.)

Paris

France's Macron says EU shouldn't bend to 'law of the strongest'

France's Emmanuel Macron and U.S. President Donald Trump have long exchanged firm handshakes, but their relationship is showing cracks. In a striking break from diplomatic norms, Trump publicly shared what he called a private message from Macron – proposing a G7 meeting in Paris and discussing Syria, Iran, and Greenland.

Trump publishes Macron's message, threatens French wine tariffs

The death toll from Sunday's high-speed train collision in Spain has risen to 41 as recovery crews use cranes to lift up the train cars and look for victims underneath. Chris Livesay reports on the search for a cause of the crash.

Adamuz

Investigators search for cause of deadly Spain train crash

Valentino, the renowned Italian fashion designer who proudly boasted he "knows what women want" has died in Rome. His sumptuous creations saw him crowned the king of the red carpet for major celebrities needing to be dressed to impress.

Rome

Valentino, 'The Last Emperor' of Italian fashion dies aged 93

The "Board of Peace" was an idea initially proposed by Trump last September as part of his plan to end the war in Gaza, although the initiative now seems to be aimed at mediating global conflicts more broadly.

Global Tariffs

Trump threatens 200% tariffs on French wine over ‘Board of Peace’

People who joined antigovernment protests in Iran are given a three-day deadline to turn themselves in and face a more lenient sentence.

Tehran

Iran police give protesters three days to surrender for leniency

Some 3,000 federal agents are still in the Twin Cities area as President Trump is threatening to invoke the Insurrection Act over continued protests against immigration operations there. Ian Lee reports.

Minnesota

ICE operations, protests continue in Twin Cities as Trump threatens

President Trump continued his push for the U.S. to take over Greenland, telling the prime minister of Norway his perceived snub for the Nobel Peace Prize meant he no longer feels obligated to "think only of peace." The prize is awarded by the private Nobel Institute, not the Norwegian government. Ed O'Keefe has more, and then Holly Williams joins with analysis.

Trump ties Greenland threat to perceived Nobel Peace Prize snub

Valentino Garavani, founder and namesake of the luxury fashion empire Valentino, has died at 93. Garavani was known for a trademarked shade of red, a staple at his fashion shows for nearly half a century.

Iconic fashion designer Valentino Garavani dead at 93

Experts studying the cause of the derailment of a high-speed train in Spain - which killed dozens of people - found a broken joint on the rails, according to a source with knowledge of the investigation.

Investigators find broken joint on track at Spanish rail crash site

Prince Harry is back in a London court, along with a slew of other high-profile figures, fighting the publisher of the Daily Mail over invasion of privacy and illegal information gathering tactics.

Prince Harry back in London court fighting British tabloids

U.S. President Donald Trump has told Norway's prime minister in a letter that he no longer feels obligated "to think purely of Peace" because he had not been awarded the Nobel Peace Prize, and he repeated his demand for control of Greenland.

Trump tells Norway he no longer feels obligated to think only of peace

Billionaire wealth surged at three times ‍its recent pace ​last year to reach its highest level on record, deepening economic and political divides that threaten democratic ⁠stability, anti-poverty group Oxfam said.

World billionaire wealth hits new peak amid rising poverty, Oxfam says

A high-speed train collision that caused a derailment in southern Spain has killed at least 39 people, officials say. Investigators are working to determine the cause of the crash.

Breakdown