Netflix Raises $1.6 Billion In Bond Market To Fund Massive Content Spending

Lawrence Kim
October 24, 2017

U.S. streaming service Netflix announced Monday, its intention to raise $1.6 billion in debt to fund its content growth plans.

The company will issue another $1.6 billion in high-yield junk bonds, no doubt to help fuel its $7 to $8 billion content budget.

NFLX will use the funds generated from the sale for "general corporate purposes, which may include content acquisitions, production and development, capital expenditures, investments, working capital and potential acquisitions and strategic transactions", it said in a statement.

"Our investment in Netflix originals is over a quarter of our total P&L content budget in 2017 and will continue to grow".

As of the end of Q3, Netflix reported $4.89 billion in debt (up from $3.36 billion at the end of 2016).

By offering original content in a country's native language, Netflix has been able to penetrate even emerging markets like Brazil. The company now has $17 billion in streaming-content commitments over the next few years, up from $14.4 billion for the year-ago quarter. Netflix is operating with negative free cash flow because it pays for titles before consumers watch the content, and the cost of those TV shows and movies are amortized by estimated viewing over time, according to the company.

Netflix said it hopes to add another 5.05 million subscribers in the third quarter. "It's an exciting period and both media and technology companies see the same big opportunity as we do".

The streamer raising operating funds follows Netflix on October 5 announcing it would raise the cost of its most popular USA plan by $1 to $11 per month, a move largely seen as helping to offset its growing content budget.

Other reports by Click Lancashire

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