Netflix confirms $2BN funding scheme
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Editor
| 22 October 2019

In the wake of its third quarter results whereby it saw its future as being very based on continuing to produce original content, subscription video-on-demand leader Netflix has undertaken a debt issue worth $2 billion in order to fund its ambition.

The company announced that it intends to offer, subject to market and other considerations, approximately $2.0 billion aggregate principal amount of US dollar denominated and euro denominated senior unsecured notes in two series.

Netflix says that it 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.

For the quarter ended 30 September 2019, the subscription video-on-demand firm posted overall revenues of $5.2 billion, up 31% over the prior year while operating income doubled on an annual basis to $1.0 billion. Q3 19 average streaming paid memberships and ARPU grew 22% and 9% year over year, respectively. Driving the growth was an overall total of 6.8 million paid net additions which while 700,000 above the figure reached in Q3 2018 , a rise of 12% and a record for a third quarter, was 200,000 under that expected. Growth was virtually all international.

In the results statement, CEO Reed Hastings said that the company had been moving increasingly to original content both because of the anticipated pullback of second run content from some studios and because its original content is working in the form of member viewing and engagement. He added that the company was expanding non-English language original offerings because they continue to help grow penetration in international markets.

Commenting on the forward strategy, and why investing in new content would be crucial especially in the light of forthcoming competition from the likes of Disney+ and Apple TV+, Hastings said : “We did well during the first decade of streaming. We’ve been preparing for this new wave of competition for a long time. It’s why we started investing in originals in 2012 and expanded aggressively ever since.”