Netflix Seeks New $2 Billion Bond Debt as Executive Compensation Balloons

With Netflix continuing to exponentially outspend ($12 billion in 2018) its over-the-top video rivals on original content and other corporate needs, the SVOD pioneer April 23 disclosed it is seeking an additional $2 billion in long-term debt financing.

The new bonds — Netflix’s first in six months — would be carried out in a two-part deal with an undisclosed interest rate and maturity date.

Netflix ended first quarter (ended March 31) with more than $10.3 billion in long-term debt – up 58.5% from long-term debt of $6.5 billion in the previous-year period.

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The SVOD behemoth could theoretically ask co-founder and CEO Reed Hastings for the funds. The 58-year-old Hastings ended the fiscal period with more than 10 million outstanding Netflix shares, worth more than $3.7 billion.

Separately, Hastings saw his total 2018 compensation increase 48% to $36.1 million from $24.4 million in 2017, according to a regulatory filing.

Chief content officer Ted Sarandos saw his compensation increase 32% to $29.6 million from $22.4 million in 2017. The executive ended the period with more than 490,000 Netflix shares worth $184.2 million.

Chief product officer Greg Peters received $12.5 million in compensation – up from $8.6 million in 2017; excluding $89 million in stock holdings.

Former CFO David Wells earned $5.4 million from $4.5 million, excluding $73.5 million in stock.

Finally, chief marketing officer Kelly Bennett, who is leaving the company, earned more than $7.3 million in 2018. He will exit the company with nearly $20 million in Netflix stock.

Activision Blizzard’s Spencer Neumann Expected to Become New Netflix CFO

Netflix is reportedly set to announce the hiring of Spencer Neumann as its new CFO, replacing long-time chief executive David Wells, who is leaving the company, according to Reuters, which cited sources familiar with the situation.

Neumann, who has been CFO of Activision Blizzard for less than two years, was put on paid leave Dec. 31 by the Los Angeles-based video game publisher, according to a regulatory filing.

Prior to Activision, Neumann held management positions at Disney’s theme park and television units.

A Netflix spokesperson wasn’t immediately available for comment.

 

CFO David Wells Leaving Netflix

Netflix Aug. 13 announced that CFO David Wells plans to step down after helping the company choose his successor. The search will include both internal and external candidates. Wells, who joined Netflix in 2004 and has served as CFO since 2010, intends to stay until his successor is found.

“It’s been 14 wonderful years at Netflix, and I’m very proud of everything we’ve accomplished,” Wells said in a statement.

Wells, who has made a small fortune through stock options during Netflix’s meteoric rise, said his next chapter in life will focus on philanthropy.

“I like big challenges, but I’m not sure yet what that looks like,” he said.

“David has been a valuable partner to Netflix and to me. He skillfully managed our finances during a phase of dramatic growth that has allowed us to create and bring amazing entertainment to our members all over the world while also delivering outstanding returns to our investors,” said co-founder/CEO Reed Hastings. “I look forward to working with him during the transition as we identify a new CFO who will help us continue to pursue our ambitious goals.”

 

Netflix Crushes Q1 New Subscriber Estimates

Netflix April 16 said it added record 7.4 million new subscribers in the first quarter (ended March 31) – topping Wall Street estimates of 6.5 million. The service added 5.4 million subs internationally, compared to 1.96 million (1.45 million forecast) in the United States.

International operations now account for 50% of revenue and 55% of memberships. Netflix has 125 million members globally. Netflix added 1.98 million domestically in the fourth quarter, underscoring the service’s maturity in the U.S.

Financially, the SVOD service generated $290 million net income on revenue of more than $3.7 billion. That compared to net income of $178 million and revenue of $2.63 billion during the previous-year period.

Netflix generated $56.3 million contribution income from its legacy by-mail disc rental unit. Revenue topped $98.7 million, compared to revenue of $120.3 million during the previous-year period. The business ended the period with more than 3.1 million subscribers, down from 3.94 million subs last year.

In the shareholder letter, CEO Reed Hastings and CFO David Wells reiterated Netflix would spend upwards of $8 billion on original content in 2018.

Scripted original series debuts in Q1 included coming of age story The End of the F***ing World and sci-fi thriller Altered Carbon as well as returning seasons of “Marvel’s Jessica Jones,” “Grace and Frankie,Santa Clarita Diet” and “A Series of Unfortunate Events.”

“Last year, we expanded our efforts in original programming to unscripted shows across several genres. Our output in this area is now comparable to similarly-focused domestic cable networks,” Hastings and Wells wrote.

The executives said the surprise launch of sci-fi movie, The Cloverfield Paradox on Super Bowl Sunday underscored a “tight” coordination between original film, product, marketing and PR teams.

“The event showcased how a big branded film can be marketed and delivered to consumers instantaneously across the globe without a wait for the theatrical window,” Hastings and Wells wrote.

Netflix continues to generate controversy releasing original feature films worldwide concurrent with any theatrical distribution. The service is skipping the Cannes Film Festival competition since its movies in France must first be screened theatrically for 36 months.

“We would never want to do that to our French members,” wrote the executives.

Hastings and Wells heralded Netflix’s first Oscar win for bike racing doping documentary Icarus.

“We’re thrilled when the creators with whom we partner are recognized for their exceptional work,” they wrote.