Netflix to raise $2B to fund new content

23 Octubre, 2018, 00:41 | Author: Arnold Perez
  • Netflix is tapping bond markets to raise $2 billion to fund new programming

Netflix plans to secure $2 billion in additional funding for original content production and acquisition - a necessary move for the entertainment giant to stay competitive in an increasingly-saturated industry. The latest proposed debt offering is the sixth time in less than four years that the company is raising $1 billion or more through bonds. The overall paid subscriber base increased by 6.96 million users, more than one million of which are based in the U.S. "It's low-priced funding for them, especially relative to the cost of issuing new equity". The company said last week that it expects to burn about $3 billion in cash this year as it continues to prioritize original series and movies. As noted by Reuters, Netflix's reasons for investing in new content likely center around the need to fight off growing competition.

Netflix said in a statement that it will use proceeds from the offering to continue to acquire and fund new content. Morgan Stanley, Goldman Sachs Group, JPMorgan Chase & Co, Deutsche Bank and Wells Fargo & Co are managing the sale of the 10.5-year bonds, according to a person familiar with the matter.

Netflix is going on a spending spree that will put it more than $10 billion in debt for the first time as it continues to pay for original shows. Moody's Investors Service raised its rating in April, when the company last issued bonds.

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Netflix's total debt stood at $11.83 billion as of September 30.

The company's announcement comes a few days after Uber Technologies Inc. raised billions of dollars of cash by tapping the high-yield bond market in a private placement.

-With assistance from Davide Scigliuzzo, Laura Benitez and Marianna Aragao.

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