That screenshot suggests you are facing two different problems.
First, it seems that Netflix does not support the space as padding character. When you are using DualSub to merge two subtitles in vertical way (i.e., one set of subtitles on the left and the other on the right), the space character is used to separate both columns. In addition a separator character is used to prevent the trimming of each line. An example of this behaviour can be seen in this snapshot:
http://bonigarcia.github.io/dualsub/img/dualsub-ubuntu13_10-mplayer.png
As of DualSub 1.1.0 you can merge the subtitles in horizontal way (i.e., one set of subtitles above the other one). With this configuration you are going to avoid these problems. Therefore my recommendation for you is to use this configuration (select "horizontal" for the layout option in the "output" panel). You should get something like this:
http://bonigarcia.github.io/dualsub/img/dualsub-win10-screenshot-1.png
The second problem is the timing of subtitles. I think you are trying to merge subtitles with different timings. In this case, DualSub is going to group the overlapping subtitles and it may happens that too many sets of subtitles are grouped in the same time line. To try to solve this, you have two options:
- Search for subtitles with the same time marks
- Play with the option "timing" implemented in DualSub. There are four alternatives: "priority of the subtitles at left/top", "priority of the subtitles at right/below", "maximize time", and "minimize time". My advice for you is to tune this configuration using trial and error until you get a good result for your merged subtitles.