Netflix seeks $2bn debt financing

Netflix original hit Stranger Things

Global streamer Netflix is seeking to raise US$2bn in new financing as it continues with its strategy of pumping money into creating content.

The US SVoD service today launched two new senior unsecured notes offerings, denominated in dollars and euros. This is the second time Netflix has approached the debt markets this year, having priced $1.9bn of bonds in late-April.

The California-based company intends to use the funds for “general corporate purposes,” including content acquisition, production and development of originals such as Stranger Things, capital expenditure and other strategic transactions.

Last week Netflix announced a hugely successful third-quarter performance which saw the company add just under seven million subscribers overall, well above the five million projection made after the company’s below-par Q2.

Netflix’s earnings before interest, tax, depreciation and amortisation topped expectations from various financial analysts to reach $584.1m with total revenues hitting $3.9bn. Netflix’s long-term debt stands at $8.3bn at present and the firm has $8.2bn in current and non-current content liabilities.

“We recognise we are making huge cash investments in content, and we want to assure our investors that we have the same high confidence in the underlying economics as our cash investments in the past,” Netflix said in a letter to shareholders last week. “These investments we see as very likely to help us to keep our revenue and operating profits growing for a very long time ahead.”

The company had originally planned to spend around US$8bn on  content in 2018, although a report by The Economist magazine earlier this year suggested this figure could exceed US$13bn.