Netflix Borrows Billions to Pay for Original Content

Irving Hamilton
October 22, 2018

Netflix is going deeper into debt this week, as it has announced yet another tap into investing so that it can produce even more original content.

Netflix Inc said on Monday it plans to raise about $2 billion in debt to fund original shows, acquire content and for possible acquisitions.

The streaming giant said the debt will be in the form of senior notes denominated in USA dollars and euros.

Bearish bets against Netflix's existing $8.4 billion of junk-rated bonds have more than tripled this year to an all-time high of $347 million, Reuters reported last week.

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Facing rising competition in the streaming space from rivals such as Amazon and Hulu, Netflix has relied on a hefty slate of original programming to differentiate its product and lure new subscribers. "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 move comes on the heels of Netflix's third quarter report last week, which surpassed analysts' expectations for subscriber growth with 7 million new customers worldwide. Netflix's free cash flow in Q3 was -$859 million (compared with -$465 million in the year-earlier quarter).

Netflix said in April it planned to raise $1.5 billion in debt, after raising $1.6 billion in October previous year, bringing the total to about $5 billion.

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