Fund Set up by Barclays PLC (ADR) (NYSE:BCS) to Finance Production Companies Contracted by Streaming Platforms

Barclays PLC (ADR) (NYSE:BCS) has unveiled a fund valued at about $125 million (£100 million) aimed at assisting television production firms fulfill orders from online-streaming services such as Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX). The production companies that are set to benefit from the fund will be mainly based in the United Kingdom.

Better cash flow for production firms

In launching the fund, Barclays acknowledged that producers of online streaming content found it hard to secure funding since revenues from the content they sell to streaming platforms is usually spread out over a period of time that is longer than is the case with content for traditional television stations. Barclays was thus changing its lending structure with the new fund to accommodate streaming producers by allowing them to borrow for longer periods.

“…To meet the needs of our clients we have to adapt with them and with the viewing habits of the public,” said the media chief for the corporate banking arm of Barclays, Lorraine Ruckstuhl, in a statement.

Cash upfront

Some production firms in the United Kingdom have already signed up with the fund. This includes the independent production firm, Roughcut Television, which has made a name for itself producing comedy shows such as People Just Do Nothing and Cuckoo for the BBC. In the arrangement with the new fund, Barclays will acquire the Netflix receivable from Roughcut for the content the U.K. production firm will create for the streaming platform. By getting the cash upfront from Barclays instead of waiting to get the money from Netflix over an extended period of time, Roughcut will be in a position to pay royalties to its creative teams in time and meet other expenses.

With streaming platforms growing in popularity, demand for original content has also risen. Netflix has for instance indicated that it will spend at the minimum $6 billion in 2017 on new productions that combined will constitute over 1,000 hours of content. Amazon is also expected to spend just as much or even more.

On Tuesday shares of Barclays PLC rose by 0.44% to close the day at $11.37.