Netflix Has About $20 Billion In Debt…But Not To Worry!

 

On a daily basis, Netflix basically transforms the way many of us now consume television and film. Such a large-scale change though, has come at a price and a rather large one at that.

 

The LA Times is reporting that the company has accumulated $20.54 BILLION in long-term debt and obligations in its effort to produce more original content.  The company isn’t showing signs of slowing down either and expects to spend at least $6 billion in content this year, while net cash outflow is forecast to grow to as much as $2.5 billion.

 

The service currently boasts 104 million subscribers worldwide, up 25% from last year and almost quadruple from five years ago. Its series and movies account for more than a third of all prime-time download Internet traffic in North America, and its stock is up nearly 50% this year alone.

 

So the question becomes what happens when subscriber growth slows (or stalls)? CEO Reed Hastings isn’t worried and says the payoff will be worth it: “That’s a lot of capital up front, and then you get a payout over many years. 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.”

Photo courtesy: Tech Insider
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