Netflix Inc. plans to raise another $ 2 billion in debt as it moves to get the funding needed for new content as the battle for streaming customers heats up with a slate of print offers.
NFLX, + 1.01%
said it plans to issue rubbish-rated bonds denominated in dollars and euros. It did not specify maturity but said it would use the revenue for a variety of purposes, including content, production and development, and potential acquisitions.
The company faces very competitive offers from deep pocket rivals Walt Disney Co.
and Apple Inc.
AAPL, + 1.57%
launched in November. Disney-plus is priced at just $ 6.99 a month compared to the $ 8.99 Netflix cost of its basic plan, and will include the entire library of movies and TV shows, including the Marvel and Star Wars franchises. Disney will retrieve some of the existing content from Netflix when the license agreements expire, including "Friends" and "The Office," which has proved popular with a millennial audience.
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Apple TV + offer is priced at $ 4.99 a month and will be free for one year with the purchase of a new Apple device. Currently, the content shift looks slim compared to Netflix, but the iPhone maker is expected to grow through acquisition.
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These services will be followed by offers from Comcast Corp.'s
CMCSA, + 1.04%
NBCUniversal service and AT&T Inc. & # 39; s
HBO Max expires in spring 2020. Netflix is already competing with Amazon.com services
AMZN, + 1.50%
Just last week, Netflix acknowledged that the upcoming competition could hurt the growth of new subscribers. The company said it expects subscriber growth to slow year over year in the generally strong fourth quarter and for the entire year, even with a strong slate of new shows.
"The launch of these new services will be noisy," Netflix executives said in a quarterly letter to shareholders. "There may be some modest headwinds to our short-term growth, and we have tried to factor this into our guidance."
For more, read: Netflix finally admits the obvious: Apple and Disney competition will hurt
Netflix has largely funded content collection and production by issuing garbage bonds, and has added long-term debt The company's most active bonds, the 5.875% notes maturing in November 2028, were last listed at an interest spread of 271 basis points over comparable Treasurys, according to the bond trading platform MarketAxess.
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Related: Why No Streaming Company Will Abolish Netflix
Shares were up 0.7% on Monday, reaching 3.6% in 2019, while the S&P 500
SPX, + 0.68%
achieved about 20% and Dow Jones industrial average
DJIA, + 0.24%
has received 15%.
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