Netflix is more than $20 BILLION in debts
The Gaza Post | The News of Palestine – California
Netflix, the global streaming giant, is more than $20billion in the red and ‘bleeding cash’ thanks to producing original content like Stranger Things.
Netflix has more than doubled its spending this year and is expected to toss more than $6billion on its slate of programming in 2017, according to The Los Angeles Times.
Its negative free cash-flow of $258 million for the same quarter last year, and $423 million for the quarter ending March 30, increased to a company-record negative $608 million for the quarter ending June 30.
The company has accumulated a whopping $20.54billion in long- and short-term debt in its effort to create and produce more original content.
The streaming giant hopes that more subscribers will be captured by producing more shows.
Netflix’s aggressive pursuit of obtaining paying customers has seemingly paid off.
The California-based company is up 25 per cent from last year with 104million global subscribers.
That’s also nearly quadrupled from five years ago.
Plus, Netflix garnered 91 Emmy Award nominations this year for more than 50 original shows.
Their nominations this year are second only to premium cable service HBO.
But thanks to streaming rivals Amazon and Hulu, Netflix is under intense pressure to keep spending money on new shows as the other two companies expand their own original programming content.
Due to that pressure, Netflix is splashing money into very costly projects this year, causing its net cash outflow forecast to grow to as much as $2.5billion. That number is up from $1.7billion last year.
Despite the company spending billions, the LA Times reports that investors have ‘expressed approval’ of the expensive moves.
In July, Netflix’s shares increased more than 10 per cent after it reported ‘better-than-expected subscriber growth,’ the LA Times reports.
The company’s stock is up nearly 50 per cent, as it closed on Friday up $1.36 at $184.04.
Netflix is not going to slow down anytime soon with spending loads of money, as the company is investing more money into self-produced original series like Stranger Things and A Series of Unfortunate Events.
According to the LA Times, executives say the goal is to ‘increase the portion of self-produced originals to 50 per cent of its slate in an effort to own more of the shows on the platform.’
‘That’s a lot of capital up front, and then you get a payout over many years,’ Netflix Chief Executive Reed Hastings said in a recent investor call, the LA Times reports.
‘The irony is the faster that we grow and the faster we grow the owned originals, the more drawn on free cash flow that we’ll be.’
The result is that the company expects ‘to be free-cash-flow negative for many years’, which means that it will continue to bleed cash for the foreseeable future, the newspaper reported.
Millions of their expenses go to licensing movies and television series, as most of their popular shows are licensed from other studios even though it’s marketed as ‘Netflix Originals.’
For example, Orange is the New Black is actually produced by Lionsgate, while House of Cards is from Media Rights Capital – an independent film and TV studio.
Sony Pictures Television production is behind The Crown, and Iron Fist is created by Marvel.
The licensing fees for the exclusive rights to stream those popular shows is paid by Netflix for an undisclosed amount.
The company is spending more money in self-produced originals with the hopes and goals of becoming independent of the other studios.
Netflix has recently been canceling pricey shows like Sense8 and The Get Down.
However, the streaming giant has said it has renewed 93 per cent of its content and plans to approve more new shows at a fast pace.
Source: Daily Mail