Netflix to raise $1.9bn in debt to fund in-house content production

By Pouyan Broukhim

The world’s leading online video streaming platform Netflix has announced its plans to raise $1.9bn in debt financing, up from the originally proposed $1.5bn, that will likely be used to further the company’s content spend and expansion strategy.

As a way of consolidating its position as one of the most attractive video streaming platforms on the market, Netflix has ramped up its in-house content production, leading to significant costs that it has routinely funded with debt financing.

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Netflix previously revealed that it planned to spend more than $8bn on content production in 2018 alone, establishing significantly more exclusive video on the site.

The latest and biggest round of debt financing to date is the fifth time in just over three years that Netflix has raised over $1bn in such a way, coming less than a year after the company raised $1.6bn in October 2017.

This aggressive expenditure into content production has paid off, with the company having adding 7.4mn subscribers in Q1 2018 compared to the 6.5mn that Wall Street had predicted. This also follows the 8.33mn added in Q4 2017, exceeding expectations by more than 2mn subscribers for the three-month period ended December.

However, this performance will have to continue, with Netflix having revealed that it owes $6.54bn in long term debt and $17.9bn in streaming content payment obligations as of 31 March 2018.

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