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Why Netflix Would Want to Purchase the Egyptian Theatre

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Netflix’s appetite for cinemas

Netflix (NFLX) is in talks to purchase Hollywood’s iconic Egyptian Theatre, according to media reports. The theatre opened in 1922 and is owned by American Cinematheque, a non-profit organization that uses the location to host screenings of classic films.

If it buys the Egyptian Theatre, Netflix would use the location to host film premieres as well as other industry events, Reuters reported. Netflix hasn’t commented on the rumors about it wanting to purchase the historic venue, but the company’s interest in owning cinemas has been reported before. The Los Angeles Times reported last year that Netflix was considering owning cinema establishments as a way to bolster its Oscar nominations.

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$3.3 billion cash reserve

What it might cost Netflix to purchase the Egyptian Theatre is currently unknown. Netflix closed the first quarter with a cash reserve of $3.3 billion, which fell from $3.8 billion in the fourth quarter. But the company is planning to raise additional funds to the tune of $2.0 billion through the bond sale, which would give it more financial flexibility. Netflix said it would use the proceeds from the bond sale to fund content production and other strategic transactions such as the acquisition.

Dish Network (DISH) and Disney (DIS), some of the traditional media companies moving to challenge Netflix in the subscription video market, sat on $2.1 billion and $4.5 billion in cash reserves at the end of the December quarter, respectively. Facebook (FB) and Google parent Alphabet (GOOGL), some of the Internet companies battling Netflix for digital video customers, closed the December quarter with $41.1 billion and $109.1 billion in cash reserves, respectively.

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