Netflix announced today it will be taking on $400 million in new debt in order to produce more original content and, separately, expand its reach in Europe. The announcement came from CEO Reed Hastings and CFO David Wells in a letter to shareholders, with Hastings pointing out that the company’s overall $900 million in debt will still be low in comparison to its equity.
Netflix is far from being the only major corporation of its kind to take advantage of historically low interest rates recently, and using an influx of cash to churn out more hits like its award winning House of Cards, Â and Orange is the New Black series certainly seems to make sense in the long term.
The company has an entire pipeline of new shows and series returns on the docket for 2014, including a new adult Sci-fi series from the Wachowski brothers (The Matrix) called Sense 8, and a series detailing the life of Pablo Escobar called Narco, as well as a forthcoming collaboration with Marvel about the superhero Daredevil, set for 2015. And those are just the ones we know about. With the extra money, Netflix is poised to dig further into the realm of original content, going head to head with premium cable networks like Showtime and HBO on an even grander scale.
The fresh cash will also help Netflix expand its reach into European markets, where the company has barely scratched the surface. The service is currently available only in the U.K., Nordic nations like Sweden and Norway, and the Netherlands. As the Wall Street Journal reports, European companies with similar streaming sites like Germany’s Sky Deutschland and France’s CanalPlay are taking the forthcoming expansion very seriously, prepping for battle as Netflix gears up for its European assault this year. The report also points out that Netflix’s skyrocketing stock, up 142% over the last year, is largely contingent on the foreseeable growth opportunities in the overseas market, which could lead to massive expansion of its overall subscriber rates.
We’ll have to wait and see how quickly Netflix can infiltrate larger markets in Europe where the streaming landscape is still at its infant stages. But with so much territory left to conquer, and a fairly consistent golden touch when it comes to original programming, the company’s bright future makes this latest divergence into the red look like barely a speck on the horizon.
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