Netflix, Inc. (NASDAQ:NFLX) has announced that it’s in the process of raising money to increase its own investments in original television shows. The company says it wants to raise $400 million in debt, using $225 million of it to refinance some of its existing debt. The company smashed earnings expectations earlier this month, so if there was ever a time to hit up investors for more money, this is it.
All Things D reports that although Netflix, Inc. (NASDAQ:NFLX) aid it would use the remaining $175 million “for general corporate purposes,” CEO Reed Hastings said they were interested in funding future original series. Currently Netflix has five series that it has announced, including “House of Cards” and “Arrested Development,” which it picked up after Fox canceled it.
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In addition to paying for new original series, Netflix also could have some licensing deals to pay for. Recent deals signed with The Walt Disney Company (NYSE:DIS) and Warner Bros. could be a bit pricey, and the company has to come up with the cash to cover them.
San Francisco Business Times Web Editor Steven E.F. Brown believes Netflix, Inc. (NASDAQ:NFLX) could be getting itself into deep cash flow waters. He points out that at this point the company as $6.4 billion in contractual obligations, with about $2.5 billion of that coming due this year some time. Netflix actually had a $58 million negative cash flow during 2012, spending most of its money on licensing for content. During the current quarter, the company said it expects free cash flow to be “more negative.”