December 12, 2012 / 12:05 AM / in 5 years

Moody's downgrades Netflix debt, outlook stable

Dec 11 (Reuters) - Moody’s Investors Service on Tuesday downgraded the debt rating for video rental service Netflix Inc , citing the company’s shift away from higher-margin DVDs and toward streaming of TV shows and films over the Internet.

“The downgrade reflects the higher risk surrounding the company’s shift to a fixed cost streaming business model which requires much higher subscriber levels to reach profitability, combined with an increasingly competitive operating environment,” Moody’s said in a statement.

Moody’s downgraded Netflix’s corporate family rating to Ba3 from Ba2 and the probability of default rating to Ba2 from Ba1. Senior unsecured notes were downgraded to Ba3 from Ba2. The rating outlook is stable, Moody’s said.

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