Netflix to borrow billions more to sustain torrid growth

Netflix Plans to Raise $2 Billion in New Debt to Fund Content Spending

The streaming giant on Monday announced plans to raise $2 billion through a bond offering, which will be issued in dollars and euros and take the company's debt past $10 billion for the first time.

Kiernan Shipka, left, and Ross Lynch, cast members in "Chilling Adventures of Sabrina", share a laugh at the premiere of the Netflix series on October 19 in Los Angeles.

SAN FRANCISCO Netflix plans to borrow another $2 billion to help pay for the exclusive series and movies that its management credits for helping its video streaming service reel in millions of new subscribers during the past five years. Netflix needs more cash because it has been spending more money than its business generates since its expansion into original programming with the 2013 release of "House of Cards". For full year 2018, the company expects free cash flow will be closer to -$3 billion than to -$4 billion, and that negative free cash flow in 2019 will be roughly flat with this year.

Once the $2 billion has been issued, Netflix will have $10 billion in long-term debt on its books, up from $8.3 billion... As of September 30, 2018, the company had $18.6 billion of obligations, which includes $10.2 billion due in one year or beyond.

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The move comes on the heels of Netflix's third quarter report last week, which surpassed analysts' expectations for subscriber growth with 7 million new customers worldwide.

Netflix shares fell more than 2 percent in early-hours trading after the announcement.

"To me it feels a bit like a win-win situation", said John McClain, a high-yield money manager at Diamond Hill Capital, which oversees $22.6 billion including Netflix debt.

Netflix said in April it planned to raise $1.5 billion in debt, after raising $1.6 billion in October a year ago, bringing the total to about $5 billion.

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