×

Netflix Plans to Raise Another $1.5 Billion in Debt Financing for Original Content

Netflix is going deeper into hock — announcing plans to offer $1.5 billion in debt notes — money it needs as it continues to dial up spending on original TV shows and movies.

[UPDATE: On Monday evening, Netflix priced the debt offering at $1.9 billion, a substantial increase from the initial plan.]

In announcing the planned debt financing Monday, Netflix included the standard boilerplate that it expects to use the net proceeds “for general corporate purposes,” but the company has been clear that it’s plowing capital into content. The financial instrument Netflix is using is to as referred as “junk bonds” in the industry, carrying a higher yield and higher degree of risk than investment-grade bonds.

Netflix reported booming first-quarter 2018 results last week, exceeding subscriber-growth estimates both in the U.S. and abroad, to hit 125 million total streaming customers at the end of the period. The company reiterated that it expects content spending to be $7.5 billion to $8 billion for 2018 on a profit/loss basis, in line with its previous estimates.

Netflix also told investors it will “continue to raise debt as needed to fund our increase in original content.” Netflix had $2.6 billion in cash and equivalents as of March 31, along with $6.54 billion in long-term debt and $3.44 billion in long-term content payment obligations.

“Our debt levels are quite modest as a percentage of our enterprise value, and we believe the debt is lower cost of capital compared to equity,” Netflix said in its April 16 quarterly shareholder letter.

The latest proposed debt offering is the fifth time in a little more than three years that Netflix is raising $1 billion or more through bonds. That included $1.6 billion last fall, $1.4 billion (1.3 billion euros) in new debt financing a year ago, $1 billion in the fall of 2016 and $1.5 billion in February 2015. In addition, last summer Netflix took out a line of credit to borrow up to $750 million.

Pictured above: “Stranger Things,” one of Netflix’s most popular originals

Popular on Variety

More Digital

  • Paradiso

    New Podcast Studio Paradiso Launches With Series for Spotify, Sybel (EXCLUSIVE)

    Former executives from Canal Plus, entertainment company Konbini and advertising film Havas have joined forces to launch Paradiso, an international podcast production studio dedicated to delivering premium scripted, documentary and kids’ content for global platforms. The company has already scored commissions from Spotify and Sybel. Paradiso’s founding partners are Lorenzo Benedetti, the founder of Studio [...]

  • Brad Pitt stars in “Ad Astra”.

    ‘Ad Astra’ Once Again Tops Studios’ TV Ad Spending

    In this week’s edition of the Variety Movie Commercial Tracker, powered by the always-on TV ad measurement and attribution company iSpot.tv, Twentieth Century Fox claims the top spot in spending for the third week in a row with “Ad Astra.” Ads placed for the sci-fi film had an estimated media value of $6.47 million through [...]

  • Andrew MorseVariety's Entertainment & Techonology Summit,

    Listen: CNN Digital Chief Says Trump Doesn't Drive Traffic Success

    No subject might get as much attention across CNN’s digital properties as Donald Trump, but that doesn’t mean the news network is dependent on him for web traffic. Andrew Morse, executive VP and general manager of the AT&T-owned company’s digital operations, pointed to recent coverage of natural disasters and international incidents as more potent audience [...]

  • Jonah Hill attends the press conference

    Instagram Debuts Jonah Hill’s ‘Un-filtered’ Bullying Docu-Series (EXCLUSIVE)

    Facebook’s Instagram, as part of its anti-bullying initiatives, funded a new series directed by Jonah Hill featuring teens and young adults talking about their experiences with bullying. The four-episode “Un-filtered” goes live Wednesday (Sept. 18) on Instagram’s IGTV channel on its mobile app and the web. In the unscripted series, Hill interviews people aged 13-25 [...]

  • Plex

    Plex Signs Up Lionsgate for Upcoming Ad-Supported Video Service

    Media center app maker Plex has struck a deal with Lionsgate to add some of the studio’s movies and TV shows to its upcoming ad-supported video service. The news comes just weeks after Plex announced a similar deal with Warner Bros. “Lionsgate is one of the biggest names in the business and we know our [...]

  • Comcast Xfinity Flex

    Comcast Drops $5 Monthly Fee for Xfinity Flex Video-Streaming Set-Top for Broadband Customers

    Comcast will hand out one free set-top box for broadband subscribers to access Xfinity Flex, its video-streaming product for internet-only customers, as it looks to punch up the value of its high-speed internet business. Brian Roberts, Comcast’s chairman and CEO, announced the new strategy at Goldman Sachs’ Communacopia conference Wednesday in New York. “One of [...]

More From Our Brands

Access exclusive content