Making content streaming battle more interesting, Netflix is planning to raise $2 billion in debt the second time year to compete with the likes of Apple, Disney, and NBC. The streaming giant specifies that it would use the junk bond issue for “content, production and development and potential acquisitions”.
Netflix has announced that it intends to use the net proceeds from a debt they are taking “for general corporate purposes, which may include content acquisitions, production and development, capital expenditures, investments, working capital, and potential acquisitions and strategic transactions.”
Netflix CEO Reed Hastings said in Netflix’s Q3 letter to shareholders, “We don’t shy away from taking bold swings if we think the business impact will also be amazing. We don’t close every deal we chase and we don’t chase every deal on the table.”
He even acknowledged that Disney is their greatest competitor all the way pointing that services like Amazon Prime, Hulu, and YouTube, and have been competing more with linear TV than with each other.
For the third quarter of 2019, Netflix reported revenue up 31% year-over-year and touted a 16.5% increase in average revenue per customer for its US streaming customer base. As of Sept. 30, 2019, the company had $19.1 billion of content-payment obligations, including $10.8 billion not on its balance sheets as they did not yet meet the criteria for asset recognition, per its 10-Q filing last Friday.
“The upcoming arrival of services like Disney+, Apple TV+, HBO Max, and Peacock is increased competition, but we are all small compared to linear TV. While the new competitors have some great titles, none has the variety, diversity, and quality of new original programming that we are producing around the world,” said Netflix.
Netflix expects over 90% of its licensed and original streaming content assets to be paid-off within four years after its month of first availability on the service.