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$2 Billion in Debt To Be Raised by Netflix For Original Content Push

The streaming giant is said to have $12.4 billion in long-term debt for several expenses.

2019-10-21T21:34:00Z

Courtesy : Variety

On one hand, we reported about how a California scammer nabbed $14 million from Netflix defrauding them later and here we are talking about news about of Netflix is planning to raise $2billion in debt.

According to a report in The Hollywood Reporter, "Netflix intends to use the net proceeds from this offering for general corporate purposes, which may include content acquisitions, production and development, capital expenditures, investments, working capital, and potential acquisitions and strategic transactions," the company said in a statement.

Amidst an obviously crazy competition soon to arrive in the form of Disney and Apple soon, the streamer intends to make sure that its subscribers do not cancel their subscription and switch over. The company, led by CEO Reed Hastings, said it would sell approximately $2.0 billion in U.S. dollar and euros denominated senior unsecured bonds after September with $12.4 billion in long-term debt.

Los Gatos, California-based Netflix has regularly raised financing via debt offerings in the past as it continues to burn through cash until it becomes what analysts call free cash flow positive. Management has said the firm is on a slow move towards that status. The company recently reported that it used $551 million in cash during the third quarter and reiterated guidance that it would burn through $3.5 billion in 2019, which it expects to be its peak. 

The company is investing heavily in the licensing and production of original programming to keep subscribers from canceling their memberships. The company confirmed earlier in October that it will spend $15 billion on content during 2019, its largest annual budget to date. 

Netflix CFO Spencer Neumann on a recent earnings conference call reiterated that the company sees its current negative free cash flow as an "investment in future content to be delivered on our service." He added: "The combination of our scale and our business model transition [to more original content] is well along, and that's why you're going to start to see that free cash flow improvement next year. ... We'll continue to scale gradually towards self-funding while we continue to go after our strategic priorities."

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