After leaving behind HBO in Emmy nominations, now the global rating agency S&P upgraded Netflix’s corporate credit rating from BB to BB-. The agency noted that the outlook is stable, “reflecting our expectation that Netflix will continue its solid global operating performance.”
This improved rating now means that it will be easier for Netflix to avail credit or simply loan, resulting in higher liquidity. This also implies that Netflix will now be able to have more free operating cash flow.
The rating agency also forecasted that Netflix will be spending around $3 billion lesser than previously expected on content production this year. The reason cited for such outcome is rapidly increasing subscriber numbers, enhanced profit margins, reduced cash flow deficits and positive trends for subscription based video streaming services.
All this was possible due to the ongoing pandemic situation that halted or slowed down the production of many upcoming projects on Netflix. Moreover, content production is not expected to get back to pre-pandemic scenario any time soon. This means that the requirement for funds will reduce, resulting in lesser debts for Netflix in the time to come.
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