Netflix is raising $1.6B in debt as its content costs balloon
Netflix right now mentioned it was raising a very giant lump of debt for the standard laundry record of makes use of that you simply’ll discover in a submitting with the SEC — although, the timing comes as its content costs could hit as a lot as $eight billion subsequent yr.
The announcement comes off a powerful earnings report final week, the place Netflix as soon as once more beat expectations for its subscriber development. The firm additionally mentioned it expects to spend between $7 billion and $eight billion on unique content in 2018, up from round $6 billion on unique content this yr. To make certain, unique content — and racking up these Emmy awards — is essential to Netflix’s future as it appears to be like to transform these high-quality exhibits (and excessive Metacritic scores) into new subscribers.
Netflix mentioned it’s anticipating to boost $1.6 billion in debt, although the announcement was fairly quick and didn’t have a ton of element. Here’s the boilerplate textual content in the submitting:
The rate of interest, redemption provisions, maturity date and different phrases of the Notes shall be decided by negotiations between Netflix and the preliminary purchasers.
Netflix intends to make use of the online proceeds from this providing for common company functions, which can embrace content acquisitions, manufacturing and improvement, capital expenditures, investments, working capital and potential acquisitions and strategic transactions.
Original content is additionally going to be more and more essential as it grows internationally, the place it’s buying nearly all of its new subscribers. Netflix mentioned it could increase its costs earlier this yr, and that will mood some expectations for home development. The firm’s future could relaxation on ensuring that unique content is sturdy, and likewise increasing into internationally-oriented unique content like its unique present three%. (That present is fairly good, by the best way, and does a very good job of demonstrating that internationally-focused content may carry out nicely domestically as nicely.)
Netflix’s inventory has been on an insane run in the previous yr, the place it’s jumped greater than 56% after a slight dip this morning following the announcement:
You can try our full report on Netflix’s earnings right here.
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