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Netflix raising $400M in debt for content and expansion

Netflix plans to zero in on Europe this year

Financial trends and news by Faith Merino
February 4, 2014 | Comments
Short URL: http://vator.tv/n/34cc

Netflix shares have skyrocketed over the last few weeks following its big award nominations, Golden Globes win, and the big revelation that Netflix’s U.S. subscribers now top HBO’s U.S. subscribers. But Netflix craves moooore. The company officially announced Tuesday that it is taking advantage of low interest rates and raising $400 million in debt via an offering of senior notes.

“Netflix intends to use the net proceeds from this offering for general corporate purposes, including capital expenditures, investments, working capital and potential acquisitions and strategic transactions,” the company explained in its ultra boring corporate announcement.

The company had revealed its plans to raise long-term debt last month in its fourth quarter earnings report. In its 10-K annual report, the company revealed that it plans to “significantly increase” its investments in original content and international expansion in 2014. Of particular interest is Europe.

While Netflix hasn’t disclosed how much its original shows cost to produce, one estimate from CAA TV agent Peter Micelli pegged the number at $4 million per episode. Notably, Netflix put down $100 million on House of Cards before a pilot episode was ever shot.

Netflix now has 31.71 million paid U.S. members, edging past HBO’s 29 million. But it still has a ways to go before topping HBO’s 117 million global members (as of the end of 2012). Netflix has a grand total of 44 million members worldwide. So it makes sense that the company plans to invest in its international expansion, because that’s where the slew of new subscribers is going to come from. It plans to focus particularly on a “substantial expansion” in Europe in late 2014.

In Q4, the company easily beat analysts’ expectations with an EPS of 79 cents on $1.175 billion in revenue. That’s up from 13 cents a share on $945 million in revenue this time last year. Meanwhile, Wall Street was anticipating 66 cents a share on $1.17 billion in revenue.

The company’s hot fourth quarter came as Web-only programming are gaining more traction as legitimate forms of entertainment. All told, Netflix has earned more than 80 major award nominations, including Emmy and Golden Globes nominations for House of Cards, Orange is the New Black, Arrested Development, and even Hemlock Grove.

House of Cards earned its very first Golden Globe award last month when Robin Wright won for Best Actress in a TV Drama. Additionally, House of Cards and Orange is the New Black were both included in the American Film Institute’s list of the ten best TV series of the year. AND Netflix’s original documentary The Square has been nominated for an Academy Award.

The lineup for 2014 is looking pretty solid with new seasons of House of Cards, Orange is the New Black, Lilyhammer, Derek, and Hemlock Grove, along with an exclusive final season of The Killing and Netflix’s first animated series for adults, BoJack Horseman. In 2015, we’ll finally get to see the new sci-fi series Sense8 from the Wackowski siblings and J. Michael Straczynski. 

 


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