Netflix to make acquisitions?
Netflix is looking to make acquisitions following its move to raise $400 million in new debt, the company said last week.
The online video service will use $225 million to refund $200 million of existing notes at lower interest rates. The rest will be used for corporate spending including capital expenditures, investments, working capital and potential acquisitions.
This money could also be used for more original programming if the company’s own political drama “House of Cards” proves to be successful. The series stars Kevin Spacey who plays a US Congressman bent on revenge after being passed over for the position of Secretary of State and cost a reported $100 million for two seasons. The Netflix difference, however, is that subscribers can watch all 13 episodes of the first series at once without having to suffer the usual week long suspense which comes with other network series.
In the fourth quarter of 2012, Netflix added 2.05 million streaming users in the US alone, meaning they now have 33 million streaming users worldwide. These strong results were mostly due to record numbers of consumers activating electronic devices such as tablets and smart TVs during the Christmas season.
This news led Netflix’s shares to surge to new heights two weeks ago as its stock climbed $43.60 to $146.86, the biggest single day gain since the firm went public more than a decade ago. Despite this, Netflix’s video-licensing bills are piling up. By December 2012 the firm owed $5.6 billion during the next five years and many analysts are questioning whether such high share prices are justified.
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