The “golden age” of television looks set to continue as leading streaming service Netflix raises $1 billion in debt to finance more original content.
In September, Netflix CFO David Wells told the audience at Goldman Sachs’ Communacopia conference that the company was looking to have fifty percent of the content on its streaming service be original productions over the next few years.
The statement the company issued about the new debt was boilerplate, saying it intends to use the funds for “general corporate purposes”, which may include content acquisitions, capex, investments, working capital and potential acquisitions and strategic transactions – but there trajectory makes clear a large part will be for original content production.
Netflix content chief Ted Sarandos said 2016 saw the company launch 600 hours of original programming, up a third from the 450 hours of content in 2015. This expansion is a continuation of Netflix’s plan for the future, which Sarandos described succinctly in a 2013 interview with GQ, where he said:
“The goal is to become HBO faster than HBO can become us.”
Over the last few months, analysts at CMC Markets and investors had become concerned about Netflix’s international growth prospects and the billions the firm was spending on new shows, but the recent earnings report has allayed those fears.
The results showed that Netflix’s international subscriber base grew by 3.2 million in the quarter, significantly beating analysts’ predictions, and far out performed Wall Street’s profit projections. This news resulted in the company’s share price to rise nearly 30 percent in the last ten days.
