Netflix Raising $800 Million More Debt to Fuel Original Content
Netflix said it plans to raise $800 million through a new debt offering, which would bring its long-term debt load to more than $3 billion.
As of Sept. 30 Netflix had $2.37 billion in long-term debt. Execs had previously said the company would be seeking to raise additional debt.
In announcing the plans Monday, Netflix issued a boilerplate statement about the new debt, saying it intends to use the funds “for general corporate purposes,” which may include content acquisitions, capex, investments, working capital and potential acquisitions and strategic transactions.
But a significant portion of its spending is related to content, and Netflix as a long-term goal is targeting about 50% of the TV shows and movies on its service to be original productions. In 2017, Netflix has said content spending will be about $6 billion on a profit-and-loss basis.
Netflix’s streaming-content obligations at the end of the third quarter of 2016 were $14.4 billion (costs that are amortized over the life of the license terms), up $1 billion sequentially. The company said the increase reflects the addition of both new original and non-original content to its library, as well as expanded rights for new territories.
The financial terms of the $800 million debt offering, including the interest rate, redemption provisions and maturity date, will be determined by negotiations between Netflix and the initial purchasers, the company said.
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