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Help--any accountants out there?

Encapsulated version of some convoluted accounting:

NFLX spent $200 million in 2007--highest ever capex spend on DVDs. Declining since then

Streaming content around since 2008 or so not very expensive and not a capital expense

Streaming content was $1.3 billion in the first 9 months of 2011. It is not a capital expense. It is not a cost of revenue expense. It is in a gray zone on cash flow from operations and labeled additions to streaming content--it is on operational cash flow and not investment cash flow where capex goes. The amount for 9 months was $1.3 billion. Normally this would decrease cash flow from operations by that amount. That would be an unmitigated disaster but for two offsetting accounts. Here's where it gets a bit hairy

To soften the blow of the $1.3 billion, they created an account line that is an increase in content liabilities. You can think of it as payables or as bills due. They also have added back the amortization that is deducted from COGS

What we end up with is a $1.2 billion offset to the $1.3 billion charge for 9 months and that makes CFFO look in line

What we have is $650 million due in 12 months that is not called a payable --it is a change in content liability.

What NFLX has is maybe $350 million in CFFO in 2011--estimated. They average around the $200-$300 million range

My accounting question is the treatment of content as part of CFFO--it's unique as far as I can tell after looking at DirecTV, Comcast and Amazon. Amazon and DirecTv expense this as cost of revenue and comcast calls it a capex expense

The problem is how to bring NFLX accounting into a form where it can be evaluated for adequacy of CFFO to cover the "payables". Any ideas? Looks to me like paying down those due in 12 months at $650 million on CFFO of $300 million may be a problem.
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