×

Netflix seeks to raise $500 million

Debt offering could help pay for original series

Netflix is sticking to its promise to refinance and raise cash for deals and new investment, taking advantage of current low interest rates to potentially fund more original programming.

The company, whose star has been rising since it wowed the market with sexy financials last week, announced plans Tuesday to raise $500 million in senior notes due in 2021 at 5.375%. Company said it expected the offering to close Feb. 1.

Announcement came hours after the company disclosed it would seek a $400 million bond offering.

Transaction will put $225 million toward redeeming its outstanding 8.5% notes due 2017, giving Netflix a breather on interest rates.

The bond offering will use the balance to fund general corporate purposes, including “capital expenditures, investments, working capital and potential acquisitions and strategic transactions,” Netflix said in an SEC filing.

CEO Reed Hastings indicated last week during his fourth-quarter earnings call that he was looking for “increased flexibility to fund future originals.”

Netflix shares have had a massive run up after subscribers rose in the fourth quarter of 2012 and a return to profitability surprised the Street. The stock was up about $1.78 in midday trade at $165.

Kevin Spacey’s “House of Cards” debuts this Friday, “Arrested Development” in May.

While Netflix may aggressively pursue more original series, some analysts remain skeptical about the price which the company pays for existing content.

“Netflix’s newest capital raise reflects the continuing cost escalation of its streaming agreements,” said analysts in a report from Wedbush Equity Research issued Tuesday. The experts also noted that the new debt further constrained the company’s cashflow and led to Wedbush’s skeptical 12-month price target of $55.

Popular on Variety

More Digital

  • Oculus Go Product Shot

    Former Oculus Head of Mobile VR Max Cohen Leaves Facebook

    Early Oculus staffer Max Cohen, who at one point led mobile product for the VR unit, has left Facebook this week, Variety has learned. Cohen’s departure is just the latest staff defection for Facebook’s VR team, which recently also lost its head of VR product, Oculus co-founder Nate Mitchell. A Facebook spokesperson declined to comment. [...]

  • YouTube logo

    YouTube Reportedly to Stop Targeting Ads in Videos for Children

    YouTube is finalizing a plan under which it would no longer serve targeted ads in videos that are popular with kids, Bloomberg reported, citing anonymous sources. The move is intended to appease U.S. regulators that have been investigating whether YouTube violated privacy laws that prohibit online services from collecting data on children, according to the [...]

  • Facebook

    Facebook Looking to Hire Journalists for Curated News Section

    Facebook is looking to assemble a small team of journalists to help curate a news tab within its app. The team of 10 media professionals will complement algorithmic curation, and highlight the top stories of the day, according to a New York Times report. “We are building a new surface for news that will give [...]

  • Best Podcasts: 14 Podcasts You Should

    14 Podcasts You Should Be Listening to

    Here are a few of the informative, funny, thrilling and downright addictive podcasts that deserve your listening attention. Read Variety’s cover story, a deep dive into the podcast revolution with Conan O’Brien, right here. CaliphateThe New York Times Rukmini Callimachi’s reporting about the Islamic State is harrowing boots-on-the-ground journalism at its finest. Conan O’Brien Needs [...]

  • Lee-Daniels-headshot

    Lee Daniels Entertainment Announces Diverse Creative Workshop

    Lee Daniels Entertainment and the online entertainment network Represent by OMV have launched a diversity-focused creative workshop to promote a diverse group of new writers. The workshop will be held from Sept. 25-28 in Los Angeles, with travel provided by American Airlines. Industry professionals will mentor aspiring creatives from underrepresented communities with workshops, meetings with [...]

More From Our Brands

Access exclusive content