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With content costs soaring, Netflix plans to raise $2 billion in debt

Published Oct 22nd, 2018 7:06PM EDT
Netflix Movies
Image: AP/REX/Shutterstock

With each passing month, Netflix continues to pump out new content at breakneck speed. At this pace, it’s literally impossible to keep abreast of and keep up with all of the new shows that pop up on Netflix every few weeks. As a prime example, Netflix in September alone rolled out 52 new original shows and movies.

Developing and acquiring new content naturally comes at quite a cost. To this point, Netflix a few months ago indicated that it anticipates spending as much as $8 billion on content in 2018, a figure that includes expenditures for new content and the licensing of existing third-party content. With Netflix spending an insane amount of money on content, the streaming giant recently announced that it plans to raise about $2 billion in debt in order to help fund its ambitious content plans.

The press release reads in part:

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.

Depending on how you look at it, Netflix’s content strategy does appear to be paying off. Just last week, Netflix delivered a stellar earnings report for the third quarter. Specifically, Netflix handily beat Wall Street expectations with respect to earnings and also managed to add an impressive 7 million new subscribers. Still, there’s no denying that Netflix’s outstanding debt is growing at a wild pace.

On a related note, it will be interesting to see what Netflix’s content costs check in at by the time 2018 draws to a close. Though the company has said it will fall in the $8 billion range, some analysts believe that the real figure may be much higher.

Yoni Heisler Contributor

Yoni Heisler has been writing about Apple and the tech industry at large for over 15 years. A life long Mac user and Apple expert, his writing has appeared in Edible Apple, Network World, MacLife, Macworld UK, and TUAW. When not analyzing the latest happenings with Apple, Yoni enjoys catching Improv shows in Chicago, playing soccer, and cultivating new TV show addictions.