US streaming service Netflix announced Monday, its intention to raise $1.6 billion in debt to fund its content growth plans.
The announcement had already been suggested in last week’s Q3 earnings update. Confirmation of the move came in a press release on the company website.
“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,” Netflix said.
Netflix shares ended the US trading day a little lower Friday, after hitting an all-time high earlier in the week following an upbeat Q3 earnings update. Pre-trade activity suggests shares could open in the green, Monday.
Q3 earnings update
In its Q3 earnings update, Netflix reported good growth and profits, including breaking though the 100 million subscribers mark. It also signalled plans to invest between $7 and $8 billion on programming.
The entertainment firm said original content was firmly in its long-term strategy.
“Our future largely lies in exclusive original content that drives both excitement around Netflix and enormous viewing satisfaction for our global membership and its wide variety of tastes,” Netflix said in its earnings announcement.
“Our investment in Netflix originals is over a quarter of our total P&L content budget in 2017 and will continue to grow.”
By creating and producing its own original series and films, Netflix is putting itself in the position to provide other entertainment services with its popular programming. And that’s a sure-fire earner – provided that original content continues to impress.
Netflix made around 50 films during 2017. It’s planning on increasing that number to 80 original Netflix films to be produced during 2018, according to Ted Sarandos, Netflix’ chief content officer.
The company’s plans to expand its original content production capabilities have already begun, with its deal to build a permanent production base in Canada.