Netflix Taking Additional $1B Debt to Finance Original Content
Netflix's future is with original series, specials, and movies, and the global streaming network is taking on additional debt to boost its supply.
Earlier today, Netflix issued a press release saying that it would raise $800 million through the sale of 10-year notes. Bloomberg reports the amount has already been increased to $1 billion due to investor demand.
While Netflix is saying the funds will be used for "general corporate purposes" such as content acquisitions, capital expenditures, and investments, the consensus is Netflix needs more money to finance its original content initiatives, which require more money upfront.
Netflix has actively been moving away from a licensed content model to an original content model for years. Licensed content from major studios is expensive, time-limited, and rarely includes global distribution rights. Original content, on the other hand, is global and permanent. Considering Netflix's string of popular originals, it's also something the company does extremely well.
While Netflix already has $2.4 billion in long-term debt, Motley Fool says not to worry. The company has a market cap of around $40 billion and $1.8 billion in cash. CBS, it notes, has $9.5 billion in long-term debt and a market cap of under $23 billion. Viacom has long-term debt of $12.3 billion and a market cap of $15.6 billion.
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