As reported in CNBC and Variety, Amazon has agreed to purchase film studio MGM for $8.45 billion, it was announced today. It what has to be one of the fastest made-deals in recent memory, the streaming giant and online shopping behemoth agreed to purchase the long on-sale film studio and owner of the James Bond series just a week after it was announced they were considering the purchase - and just a few days after it was reported that the James Bond series may complicate the sale. The deal is expected to be approved by the end of 2021. Amazon will assume MGM’s current debt and MGM will operate as a brand under Amazon’s umbrella.
The deal marks Amazon’s largest and boldest advance yet into the entertainment industry, further cementing the company’s streaming ambitions. The purchase is the second largest in the company’s history after it’s purchase of Whole Foods for $13.7 Billion back in 2017. Amazon is hoping that MGM’s library of 4,000 films and 17, 000 TV shows will bolster it’s TV and Film division, Amazon Studios. Senior VP of Prime Video and Amazon Studios Mike Hopkins said of the deal: “The real financial value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team. It’s very exciting and provides so many opportunities for high-quality storytelling.” MGM Chairman Kevin Ulrich added: “I am very proud that MGM’s Lion, which has long evoked the Golden Age of Hollywood, will continue its storied history, and the idea born from the creation of United Artists lives on in a way the founders originally intended, driven by the talent and their vision. The opportunity to align MGM’s storied history with Amazon is an inspiring combination.”
Although Amazon’s shares barely moved in either direction on the announcement, the deal does show their readiness to splurge in a market that is becoming massively over-crowded. All streaming giants are committing billions towards both licensed and original content to get and keep subscribers on board and stay financially committed. The deal comes at a time when WarnerMedia and Discovery are set to merge at a price tag of $43 Billion as Warner spins off from AT&T. Consolidation of content it seems, is the key to the future.
Jeff Bezos has made no secret of the fact that he sees video content as the path to securing Prime memberships - which have passes 200 Million worldwide. He’s spent $11 Billion in the last year on video and music content, arguing that the ‘Flywheel effect’ will help achieve success: More content attracts more memberships. Subscribers then spend more money on the shopping site. Amazon has also been helped by it’s streaming hits - the films it helped finance - such as The Big Sick and Manchester By The Sea. Not to mention hit series like The Marvelous Mrs. Maisel. It’s spending power has reached epic proportions with the upcoming ‘Lord of The Rings’ series, reported to be costing half a billion dollars to finance and becoming in the process the most expensive series ever made.
Jeff Blackburn, formerly Bezos’ top lieutenant is being drafted back into the company to oversee the new Global Media & Entertainment division and consolidate all the company’s entertainment branches under one umbrella, including Prime, Amazon Studios, Games and Twitch and it’s music and podcasting strands. This move will no doubt be important as they take ownership of MGM’s Library, including Bond and films like “12 Angry Men,” “Basic Instinct,” “Creed” and “Rocky,” “Legally Blonde,” “Moonstruck,” “Poltergeist,” “Raging Bull,” “Robocop,” “Silence of the Lambs,” “Stargate,” “Thelma & Louise,” “Tomb Raider,” “The Magnificent Seven,” “The Pink Panther,” “The Thomas Crown Affair”. It’s hit shows include Handmaid’s Tale, Fargo, Shark Tank and The Real Housewives, which it owns via the cable network Epix. The sale brings to an end several years of woes for MGM, which has been looking for a buyer since it emerged from Bankruptcy 2010, having been purchase by several private funds including Anchorage Capital, Highland Capital Partners, Davidson, Kempner Capital Management, Solus Alternative Asset Management and Owl Creek Investments.
There is a downside to the deal, since it could raise antitrust concerns for Bezos’ company, already facing ongoing investigations by several federal agencies, state attorneys as well as Europe’s antitrust watchdog. You can find more on this story in the original article over on CNBC.