Netflix is in $20.54 billion of debt
Written by worlddancefm on 3rd August 2017
Netflix is in $20.54 billion of debt, according to reports.
The streaming giant has accumulated the figure as a result of creating original content and “pouring money into expensive prestige projects”, a report by the Los Angeles Times states.
Netflix estimates it will spend over $6 billion on content this year as it looks to expand on its current number of 104 million subscribers. That figure is 25 per cent more than last year, with subscriptions representing the company’s number one revenue driver.
In an attempt to increase its subscription growth, the Hollywood-based company wants to up its own shows to 50 per cent of its library. However, industry experts warn that a failure to produce popular series’ could worsen the debt.
Mike Vorhaus, president of media and digital video consultancy Magid Advisors, said: “Nobody is ever the dominant player forever. I think they’re going to need some luck in not drowning in debt in the ultimate slowdown of growth.”
One of Netflix’s most popular shows, Stranger Things, is due to return in October, while hip hop musical The Get Down was scrapped after season one cost $120 million to produce.
Update: Netflix has issued a statement dismissing the Los Angeles Times report as inaccurate.
The statement reads: “The LA Times story inaccurately calculates our debt as $20 billion by counting our streaming obligations (i.e. our content contracts with studios) of $15.7b as debt, which it isn’t. The correct number: we have total gross debt of $4.8 billion vs. our equity market value of about $75 billion. LA Times has corrected the story.
“For more context, the $15.7b accounts for future content expenses that roll through the income statement over time. Every broadcaster, cable network and streamer that has licensing agreements uses the same structure. As a point of reference, Disney/ESPN has $49b in similar commitments for sports contracts.”