Netflix to raise another US$2bn in debt

Netflix has announced plans to raise another US$2 billion in debt financing for content acquisitions, production and development.

The proposed US$2.0 billion offering of senior notes will be used for “general corporate purposes,” according to the SVOD giant, which could also include investments, acquisitions and strategic transactions.

The announcement marks Netflix’s latest bond offering as it continues to aggressively expand its content slate. Earlier this year it said it would spend some US$8 billion on content in 2018.

In April Netflix priced a bond offering of US$1.9 billion and made similar senior notes offerings of €1.3 billion in April 2017, of US$1 billion in October 2016 and US$1.5 billion in 2015.

In its most recent quarterly earnings announcement and letter to shareholders, Netflix said that its cash flow in Q3 was negative-US$859 million, compared to negative-US$465 million in the year ago quarter.

“As a reminder, our growing mix of self-produced content, which requires us to fund content during the production phase prior to its release on Netflix, is the primary driver of our working capital needs that creates the gap between our positive net income and our free cash flow deficit,” said Netflix in its shareholders letter.

“We recognise we are making huge cash investments in content, and we want to assure our investors that we have the same high confidence in the underlying economics as our cash investments in the past. These investments we see as very likely to help us to keep our revenue and operating profits growing for a very long time ahead.”

Netflix added a record number of new members in the third quarter thanks to strong growth across all its markets including Asia, taking its total user-base to 137 million. Its revenues also grew 34.0% year-on-year to US$4.0 billion, while operating income was US$481 million compared to US$209 million a year earlier.