×

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

More Digital

  • Alibaba Buys 8% Stake in Chinese

    Alibaba Buys 8% Stake in Chinese Video Platform Bilibili

    Alibaba has purchased an 8% stake in the Chinese online video platform Bilibili, the official Xinhua news agency reported. Bilibili is one of China’s top video streaming and entertainment platforms, with about 92 million monthly active users and 450 million page-views per day. Founded in 2009, it was listed on the NASDAQ last March. Alibaba’s [...]

  • Clevver-Logo

    Hearst Magazines Buys Clevver's Pop-Culture YouTube Channels After Defy's Demise

    Hearst Magazines has snapped up Clevver, a network of female-skewing lifestyle and pop-culture news YouTube channels that had been owned by now-defunct Defy Media. Clevver was left homeless after Defy’s sudden shutdown in November; its principals said at the time they were looking for a new home. Hearst Magazines sees a digital fit with Clevver’s [...]

  • "Brother" -- Episode 201-- Pictured (l-r):

    CBS Interactive's Marc DeBevoise on Streaming Boom, Content Strategy, and Apple

    Not everyone wants or needs to be Netflix to succeed in the streaming space. And not everyone sees Apple’s enigmatic new service as a threat. Even as rival streaming services offer gobs of content, CBS Interactive’s president and COO Marc DeBevoise sees the company’s targeted original programming strategy continuing to attract viewers to its All [...]

  • Rhett-Link-Good-Mythical-Morning

    Rhett & Link's Mythical Entertainment in Talks to Acquire Smosh (EXCLUSIVE)

    Smosh, the YouTube comedy brand left stranded after parent company Defy Media went belly-up, may be about to get a new business partner. Mythical Entertainment, the entertainment company founded by top YouTube comedy duo Rhett & Link, has been in talks about acquiring the Smosh brand, sources told Variety. Multiple potential buyers came forward to [...]

  • Pokemon Go

    Proposed 'Pokémon Go' Lawsuit Settlement May Remove Poké Stops, Gyms

    A proposed settlement in the class action lawsuit against “Pokémon Go” developer Niantic could remove or change a number of Poké Stops and Gyms in the popular augmented reality game. The proposed settlement was filed in a California court on Thursday and applies to anyone in the U.S. who owns or leases property within 100 meters [...]

  • Skyline of Doha at night with

    Qatar's beIN Rallies Support From U.S. Companies Against Pirate Broadcaster beoutQ

    Qatari powerhouse beIN Media Group has rallied support from American sports and entertainment entities, including Discovery and Fox, behind its request that the U.S. government place Saudi Arabia on its watch list of top intellectual property offenders. The Doha-based broadcaster, a state-owned spinoff of Al Jazeera news network, accuses the Saudi government of harboring pirate broadcaster [...]

More From Our Brands

Access exclusive content