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Netflix takes on $400M in new debt to fund European expansion

Image Credit: Illustration by Tom Cheredar

Netflix is once again focusing on expanding its streaming video service to new international markets.

Today the company announced that it will take on $400 million in new debt, which it plans to use for “general corporate purposes, including capital expenditures, investments, working capital, and potential acquisitions and strategic transactions.” A large chuck of that money will also likely be used to produce more original content and launch Netflix in both Germany and France — a move that has been rumored over the past few months.

The expansion efforts are a smart move because Netflix needs to establish itself as the dominant streaming video service in new markets before potential competitors set up shop. In the past, Netflix’s strategy has been to use profits from its domestic business to fuel international growth. In doing so, the company can diversify where its pulling revenue from without jumping into projects that stray from its core streaming video business.

The debt comes in the form of 10-year senior notes it will offer to institutional investors. This will bring Netflix’s total long-term debt to about $900 million.

Via Variety

More information:

With more than 25 million members in the United States, Canada and Latin America, Netflix, Inc. [Nasdaq: NFLX] is the world's leading Internet subscription service for enjoying movies and TV shows. For US$7.99 a month, Netflix members ... read more »

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