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.”

 

Netflix Seeks Another $2 Billion in Debt

What’s $8 billion in debt?

Netflix Oct. 22 announced that it intends to offer, subject to market and other considerations, about $2 billion in bonds through two series of notes to qualified institutional buyers.

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

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

The SVOD pioneer ended its most-recent fiscal period with $8 billion in debt, in addition to more than $18 billion in third-party content license obligations.

Of course Netflix can justify asking for money. It ended Q3 with subscriber growth of nearly 7 million, including 1 million in the United States – beating company projections.

The sub growth trumps any other SVOD service in the world. The service ended the period with 137 million subs, including 130 million paid.

The SVOD pioneer also generated nearly $4 billion in revenue, up 34% from the previous-year period of nearly $3 billion. Net income tripled to $403 million from $130 million last year.