Faced with staggering content costs, Netflix is turning to a reliable recipe to meet its vast cash needs: raising junk bonds.
Faced with staggering content costs, Netflix is turning to a reliable recipe to meet its vast cash needs: raising junk bonds.Netflix, bracing for competition from the likes of Disney , revealed plans this week to issue another $2.2 billion of high-yield debt. The king of the streaming world can deploy the funds to help plug the notorious cash burn that has underpinned its rapid subscriber growth.
Universal, meanwhile, announced in January it will debut a streaming service in 2020. And that rival platform could take away streaming stalwarts like"The Office" and Friends" from Netflix. Universal has reportedly begun internal talks about removing"The Office" from Netflix when the show's contract expires in 2021.Netflix's unsustainable balance sheetAgainst that backdrop, Netflix warned earlier this month it will burn through another $3.5 billion of cash in 2019, up from its earlier projection of $3 billion. "There's no change to our plan to use the high yield market to finance our cash needs," Netflix told shareholders in a letter this month.
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