Netflix plots $1bn raise for content acquisitions

Netflix is looking to raise US$1 billion in order to fund further content acquisitions, investments and strategic transactions.

Intriguingly, the announcement of a US$1 billion debt offering in senior notes was an adjustment on a plan to raise US$800 million revealed just hours before.

Los Gatos-based SVOD giant Netflix said the funds would be used for “general corporate purposes, which may include content acquisitions, capital expenditure, investments, working capital and potential acquisitions and strategic transactions”.

The company made a similar move in February 2015, when it raised US$1.5 billion. It also raised debt in 2009 and 2013, securing US$200 million and US$400 million respectively.

Netflix has already committed to spending US$6 billion on content this year, and it wasn’t immediately clear if those funds were separate to the new offer. Around US$1.3 billion will go on originals this year, though that number will jump as Netflix looks to move towards a 50-50 split of commissioned/acquired programming.

In effect, Netflix is taking on more debt, which could affect its share price, particularly after a shaky 2016 on the stock market.

However, it recently recorded excellent third quarter financial results, and has been heavily linked with a sale to The Walt Disney Company, meaning the digital firm remains a Wall Street darling and is nearing its 2015 share high of US$133.27.

In related Netflix news, the company’s CEO, Reed Hastings, told a Wall Street Journal tech conference he supported AT&T’s acquisition of Time Warner providing it doesn’t lead to an “unfair advantage” for HBO.

Netflix and HBO should be “treated the same” in terms of distribution, he said, adding: “The key thing is whether there is going to be net neutrality, which hasn’t been AT&T’s favorite topic,” he said.

In the US, HBO goes up against using its premium cable network and direct-to-consumer platform HBO Now.

Whether AT&T and Time Warner ultimately end up as a merged unit will depend on thorough regulatory investigations of the US government.