Netflix has been spending fairly heavily on their original content as of late, and now they’re looking for a little financial help. The company announced today that they were taking on more than $1 billion in debt from outside of the US.
According to a release, the funds will be used for “capital expenditures, funding content acquisitions, investments, and transactions related to executing Netflix’s strategy.” That means Netflix can really use the money in about any way they see fit. But it’s clear that more content is what they’re after.
Some of Netflix‘s most recent programming, including The Crown and The Get Down, was the most expensive television ever made, so it makes sense that they’re reaching out for some financial assistance.
Of course, it’s important to note this isn’t new territory for Netflix at all. They took on similar debt back in 2015 and again late last year. This also wasn’t a surprise, as Netflix said last month in a letter to investors that their “debt to total cap ratio, at under 10%, is quite conservative compared to most of our media peers at 30%-70%, and conservative compared to efficient capital-structure theory. Thus we will continue to add long-term debt as needed to finance our expansion of original content, including in Q2’17.”
So what’s the significance of this being “non US” debt? It turns out Netflix sought out that debt in purpose because they are “a global company and [they] want to have access to global capital markets. Interest rates are also currently attractive in Europe.”
While this money will go towards creating new content, it’s worth noting that right now, the streaming service’s content library is smaller than it has been before. But original content has been the driving force in their subscriber base, and as they near 100 million subscribers, they’re going to need more.
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