According to Variety, Netflix has apparently taken out a new line of credit for $500 million from Deutsche Bank, Goldman Sachs, JPMorgan Chase Bank, Morgan Stanley and Wells Fargo (with an option to extend said credit to $750 million). Netflix has said they won’t immediately use the credit, The company simply wants to have it on hand for future original programming and programming acquisitions. As someone who’s asked for a credit limit extension or two in my day, saying that you won’t use your new credit is a lie but one that we all frequently use.
Netflix’s strategy towards their business strikes me being similar to Amazon’s. Which is taking on incredible debt but managing a positive cash flow month to month. Last year they had an operating revenue of almost $9 billion, but only $380 million of operating income. You have to spend money to make money they say. I should add I got a C in economics and never finished my business degree so take that astute business analysis with a grain of salt.
I don’t really have any idea what this will mean as far as the Netflix bottom line goes, but this will undoubtedly lead to more content. Given Netflix’s track record, that’s a very good thing. More original programming like ‘Stranger Things’, More acquisitions like ‘I Don’t Feel at Home in this World Anymore’, More $120 million dollar Baz Luhrmann productions about the rise of hip-hop. On second thought, maybe less of that last one.
