Netflix is reported to be swimming in $20 billion of debt

The company has invested a huge amount on original content.

Netflix are said to be $20.54 billion in debt, according to the L.A. Times, but the streaming company have hit back, saying the story “inaccurately calculates our debt”.

The company released a statement saying that their $15.7 billion of streaming obligations doesn’t count as debt, as it’s “future content expenses that roll through the income statement over time”.

It might come as a surprise, but some of Netflix’s most famous shows are actually licensed from other companies – for undisclosed fees – despite being labelled ‘Netflix Originals’. ‘House of Cards‘ is made by Media Rights Capital, ‘Orange is the New Black‘ is produced by Lionsgate and ‘The Crown’ comes from Sony Pictures Television.

The L.A. Times reports that this leaves Netflix with $4.8 billion total gross debt, compared to their equity market value which is around $75 billion.

Netflix is investing more money in self-produced originals like ‘Stranger Things‘, in the hope that it will become less reliant on external studios. They hope to eventually have a catalogue that consists of 50% originals, however it’s predicted that this could take decades to happen.

However, experts aren’t convinced that this is the way forward – while original content like ‘Stranger Things’ have been huge hits, other shows like ‘Sense 8’ and ‘The Get Down’ have been cancelled.

“Nobody is ever the dominant player forever,” Mike Vorhaus, president of Magid Advisors, a media and digital video consultancy, told the L.A. Times. “I think they’re going to need some luck in not drowning in debt in the ultimate slowdown of growth.”