Tag: Bonds

Netflix Seeks Another $1 Billion in Funding

Fresh off quarterly financials that saw subscriber growth go through the roof, Netflix is sticking its hand out to the market looking for $1 billion in funding for content creation in the United States and Europe.

Perhaps lost in the staggering 15.77 million Q1 subscriber additions is the reality Netflix has nearly $15 billion in debt — a line item management doesn’t mind increasing. With the lack of free cash flow an ongoing issue for Netflix critics, CEO Reed Hastings was quick to point out in the April 21 shareholder letter that due to shutdowns in production, cash flow had stabilized.

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Net cash used in Q1 operating activities was +$260 million compared to -$380 million in the prior year period. Free cash flow totaled +$162 million compared, with -$460 million in the year ago quarter.

With Netflix productions currently paused, management is now expecting year-end free cash flow of -$1 billion compared with previous expectation from -$2.5 billion and -$3.3 billion actual in 2019).

“We have more than 12 months of liquidity and substantial financial flexibility,” Hastings and CFO Spenser Neumann wrote in the shareholder letter. “Our financing strategy remains unchanged — our current plan is to continue to use debt to finance our investment needs.”

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ViacomCBS Sells $2.5 Billion in New Debt

With its businesses drastically impacted by the coronavirus pandemic, ViacomCBS has become the latest media company going to the markets looking for fiscal relief — agreeing to sell $2.5 billion in new debt to help its operations weather the storm.

The corporate parent to Paramount Pictures, CBS All Access, Noggin and Pluto TV, among other properties, sold $1.25 billion in aggregate principal amount of 4.750% senior notes due 2025, and $1.25 billion in aggregate principal amount of 4.950% senior notes due 2031. The sale of the bond debt is expected to close on April 1.

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ViacomCBS said intends to use the net proceeds from the offering for general corporate purposes, which may include repayment of outstanding indebtedness.

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Comcast Selling $4 Billion in New Bonds (Debt)

Comcast is taking a fiscal page from Disney’s playbook and not waiting for Congress to bail out its struggling business segments.

The media giant March 25 disclosed it is selling $4 billion in new bonds (long-term debt) that mature in the next five to 20 years.

“We intend to use the net proceeds from the offering … for general corporate purposes,” Comcast said in the filing. The company operates Comcast Cable, satellite TV operator Sky, DreamWorks Animation, NBCUniversal — the latter including Universal Pictures and FandangoNow, among other businesses.

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The funding sale comes the day after Comcast issued a warning to investors that its business segments could have a “material adverse” impact in the short-term — including the first fiscal quarter ending March 31.

NBCUniversal launches the branded Peacock subscription streaming video platform on April 15.

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Netflix Ups Long-Term Debt by $2 Billion

Netflix Oct. 21 announced that it intends to offer, subject to market and other considerations, about $2 billion worth of bonds to institutional buyers.

The interest rate, redemption provisions, maturity date and other terms of each series of notes will be determined by negotiations between Netflix and the initial purchasers.

Netflix said it intends to use the net proceeds from the bond sale for general corporate purposes, which includes content acquisitions, production and development, capital expenditures, investments, working capital and potential acquisitions and strategic transactions.

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Netflix ended its most-recent fiscal period with more than $12.4 billion in long-term debt. It also has $19.1 billion in third-party content streaming obligations.

Critics cite Netflix’s ongoing negative cash flow as proof the company is operating beyond its fiscal means.

Net cash used in operating activities in Q3 was a negative $502 million, which was an improvement from the negative $690 million used in in the prior-year period. Free cash flow in Q3 totaled negative $551 million compared to negative $859 million in Q3 2018

Netflix contends that with a growing revenue base and expanding operating margins, it will be able to fund more of its content spending internally.

“We are expecting free cash flow to improve in 2020 vs. 2019 and we expect to continue to improve annually beyond 2020,” the service wrote in its shareholder letter. “As we move slowly toward FCF positive, our plan is to continue to use the high yield market in the interim to finance our investment needs.”

 

Disney Selling Bonds to Pay Down Fox Acquisition Debt

When the Walt Disney Co. acquired 20th Century Fox Film for $71 billion, it also assumed more than $13 billion of Fox’s outstanding debt.

Despite ongoing downsizing at Fox Studios and selloff of Fox’s regional sports TV networks, Disney Sept. 3 announced the commencement of an offering of one or more series of senior unsecured notes and fixed rate senior unsecured notes pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission.

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The new bonds are guaranteed by TWDC Enterprises 18 Corp., a subsidiary of Disney. 

Disney said it intends to use the net proceeds from the bond offering pay down previously existing notes related to the Fox acquisition, in addition to prepaying in full the aggregate principal amount outstanding under a “364-Day Credit Agreement,” dated as of March 15, 2019, which lists Disney as the borrower.

MoviePass Owner Initiates $164 Million Bond Sale

NEWS ANALYSIS — The corporate owner of fiscally-challenged movie ticket subscription pioneer MoviePass has thrown another Hail Mary.

Helios and Matheson Analytics, which owns 92% of MoviePass, June 21 said it entered into a securities purchase agreement with institutional investors to issue convertible notes (bonds) worth $164 million and 20,500 shares of preferred stock.

HMNY said it would use the funds for general corporate purposes.

The bond sale comes the day after AMC Theatres — a beneficiary of MoviePass foot traffic — announced it is launching its own $20 monthly subscription service.

MoviePass, which recently topped 3 million subs on its way to a year-end goal of 5 million subs, continues to spend millions of dollars per month more than it collects paying exhibitors for tickets consumed by subscribers.

The loss-leader business model has contributed to HMNY stock languishing below 35 cents per share.

New bond holders have the option to redeem the notes within seven months at a conversion price of $1. The preferred stock is not convertible into common stock. Each share of preferred stock is entitled to 3,205 votes per share on all matters on which holders of common stock are entitled to vote.

Netflix Doubling Long-Term Bond Debt

Netflix April 23 announced it is offering upwards of $1.5 billion in senior notes to qualified institutional investors. The interest rate, redemption provisions, maturity date and other terms of the bonds will be determined by negotiations between Netflix and the initial purchasers.

Netflix ended the first quarter (March 31) with $6.5 billion in long-term bond debt – nearly twice the long-term debt ($3.3 billion) during the previous-year period.

Netflix said it intends to use the proceeds from the bond sale for general corporate purposes, which could include content acquisitions, production and development, capital expenditures, investments, working capital and potential acquisitions and strategic transactions.

The streaming video subscription pioneer is spending $8 billion on original content this year. It ended the first quarter with almost $18 billion in long-term streaming content obligations to third parties – up from $15.3 billion in the previous-year period.