Netflix has filed to sell $1.8 million in debt, the first such offering since the company received an upgrade last year from credit ratings agencies Moody’s and S&P to investment-grade status.
The move, telegraphed in its quarterly letter to shareholders released in its earnings report this month, is designed to make Netflix’s long-term debt of $12.2 billion a bit more manageable. Overall, the company has evolved in recent years from a money-losing concern to the owners of one of the most enviable balance sheets in the entertainment business. The last time it raised funds via a debt sale was in April 2020, at the start of the Covid pandemic.
“We have $1.8B of debt maturities in the next twelve months, which we plan to refinance,” the company wrote in the shareholder letter. In an SEC filing on Tuesday, the company said proceeds from the debt sale would be used for “general corporate purposes.” The transaction will consist of two parts – $1 billion due in 2034 and bearing an interest rate of 4.9%, and $800 million due in 2054 with an interest rate of 5.4%.
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The financial move comes nearly two weeks after the company reported another batch of strong results, adding 8 million subscribers in the quarter ended June 30 to reach almost 278 million worldwide.
In its upgrade, Moody’s credited Netflix with maintaining “healthy balance sheet and keeping ample liquidity.” The company has streamlined its operations over the past couple of years, undergoing layoffs and cost reductions while also and mounting a new advertising tier in late-2022. On the expense side, along with a set of pricey film and TV bets, the company has also become a player in sports and other live programming, giving it another reason to continue shoring up its financial position. It recently swung a 3-year deal for multiple NFL Christmas Day games at a reported $75 million per game, and also acquired rights to the WWE’s cable TV mainstay Monday Night Raw in a 10-year, $5 billion transaction.
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