Netflix, addressing an employee walkout Wednesday protesting the streamer’s defense of Dave Chappelle’s stand-up special rife with transphobic and homophobic commentary, issued a statement acknowledging “deep hurt” the controversy has caused.

In a statement, Netflix said, “We value our trans colleagues and allies, and understand the deep hurt that’s been caused. We respect the decision of any employee who chooses to walk out, and recognize we have much more work to do both within Netflix and in our content.”

Chappelle’s “The Closer,” released Oct. 5, has stirred a major backlash inside and outside the company. On Wednesday (Oct. 20), hundreds of company employees plan to stage a walkout to protest Netflix management’s uncompromising position on the issue, and organizers have set a “Stand Up in Solidarity” rally (originally to be held at Netflix’s EPIC building in L.A. but since relocated to the company’s office at 1341 Vine St.).

Netflix co-CEO and chief content officer Ted Sarandos, in an interview Tuesday with Variety, acknowledged that he “screwed up” in internally communicating the company’s position on the Chappelle special and by not being more sensitive to employees who were hurt by the decision to keep it on the platform. But he indicated “The Closer” will remain on Netflix and reiterated that he doesn’t believe it falls into the category of “hate speech.”

Sarandos had previously defended the company’s partnership with the comedian in internal memos. “As with our other talent, we work hard to support their creative freedom — even though this means there will always be content on Netflix some people believe is harmful,” he wrote to senior execs on Oct. 8.

In a subsequent communication sent to all employees, first reported by Variety, Sarandos doubled down on Netflix’s stance about the Chappelle special and said “we have a strong belief that content on screen doesn’t directly translate to real-world harm.”

Sarandos’ statements have only angered critics, who believe Netflix is helping to perpetuate anti-trans attitudes that do, in fact, have real-world ramifications. Netflix’s Chappelle special has drawn sharp criticism from talent who have worked with the streamer including comedian Hannah Gadsby and Jaclyn Moore, co-showrunner of “Dear White People.”

Last Friday, Netflix said it fired an employee who leaked confidential financial and viewing data on Chappelle’s two most recent specials, “Squid Game” and Bo Burnham’s “Inside.” The info, which the staffer admitted to sharing externally, was cited in Bloomberg articles. The leaker may have been trying to embarrass Netflix by pointing out that the company paid more for “The Closer” ($24.1 million) than “Squid Game” ($21.4 million), an unexpected global hit that Netflix’s internal documents project will produce nearly $900 million in value, per Bloomberg.

In “The Closer,” Chappelle admits to being “transphobic” and wonders whether there is “even such a thing as a woman or man or anything anymore.” He shares anecdotes about befriending a trans woman and beating up a trans woman, while also aligning himself on “Team TERF” (referring to “trans-exclusionary radical feminist”) with “Harry Potter” author J.K. Rowling, who has made anti-trans comments.

On Tuesday, Netflix reported better-than-expected third-quarter subscriber gains — half of which came from the Asia-Pacific region — lifted in part by surprise global hit “Squid Game.” The Chappelle controversy didn’t come up on the Q3 earnings interview, which was moderated by Fidelity Management & Research Co. analyst Nidhi Gupta, nor did the company mention it in the Q3 shareholder letter.