Yahoo Finance Netflix plans $2 billion bond offering to fund original shows
Netflix is returning to the junk-bond market to help fund its heavy spending on original TV shows and movies.
The video-streaming behemoth, which has countless hits with TV shows such as Maniac and The Crown, is selling $2 billion of senior unsecured bonds in dollars and euros.
The proceeds will be used to to acquire and fund new content - a strategy that the firm is betting will help it beat rivals such as Amazon when it comes to subscriber numbers.
Netflix's existing $8.4bn of junk-rated bonds have increased from $6.5bn reported at the end of 2017. The company last issued $1.5 billion of debt in April and $1.6 billion in October 2017.
The Queer Eye-maker has so far been a sensational stock-market story. Shares have multiplied a hundredfold in the last 10 years and, this year, it briefly surpassed Disney as the world’s biggest media company.
To continue its growth, Netflix is planning to spend more than $8bn on original content in 2018, a $2bn increase from last year.
"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," it said in a letter to investors.
The company said in its earnings release last week that it expects to burn about $3 billion in cash this year and another $3bn next year.
Profits more than tripled to $403 million in the quarter while revenue increased 34pc compared to the same period last year, reaching nearly $4 billion.
However, investors continue to scrutinise the company's subscriber growth and monetisation plans as incumbent media brands like Disney and HBO play catch-up by investing in the technology needed to bring TV shows and films to the web.
Netflix said it added 7 million new customers in the three months to September, and now has a total of more than 137 million, 135 million of whom pay monthly fees.
