Amazon is going Hollywood. The online shopping giant is buying MGM, the movie and TV studio behind James Bond, 'Legally Blonde' an...
Amazon is going Hollywood.
The online shopping giant is buying MGM, the movie and TV studio behind James Bond, 'Legally Blonde' and 'Shark Tank,' with the hopes of filling its video streaming service with more stuff to watch.
Amazon will pay $8.45billion for MGM, making it the company's second-largest acquisition after it bought grocer Whole Foods for nearly $14billion in 2017.
The deal is the latest in the media industry that's aimed at boosting streaming services to compete against Netflix and Disney+.
Twitter was ablaze with hot takes from critics like Zephyr Teachout - the Fordham university professor and lawyer who lost to NYS Gov. Andrew Cuomo in the 2014 Democratic primary - who say Amazon is a monopoly that should be broken up.
Amazon didn't say when it expects to close the MGM acquisition, which is subject to regulatory approvals and other routine closing conditions. However, insiders believe the deal will be approved by the end of 2021, Variety reported.
During Amazon's first quarter results, the company said 175 million Prime members streamed shows last year, and more than 200 million have access to it because they're signed up for its Prime membership, which gives them faster shipping and other perks.
Households with Prime memberships typically spend $3,000 a year on Amazon, more more than twice what households without the membership spend, according to Morgan Stanley, which is why Amazon wants to invest in Prime.
Brian Yarbrough, a senior analyst at Edward Jones, told The New York Times: 'More and more Prime members are using video more often, spending more hours on there, so I think this is a way to add more content and more talent around movies.
'This isn't one studio buying another ... If you're Amazon, the perspective is what's the potential for Prime membership, what is the potential for advertising.'
Jeff Bezos's Amazon is paying $8.45 billion for MGM, making it the company's second-largest acquisition after it bought grocer Whole Foods for nearly $14 billion in 2017
In December, MGM said it was exploring a sale. It said it had tapped investment banks Morgan Stanley and LionTree LLC, and started a formal sale process
Besides Prime Video, Amazon also has a free streaming service called IMDb TV, where Amazon makes money by playing ads during movies and shows.
Buying MGM would give Amazon access to 4,000 post-May 1986 films, shows and famous characters, including Rocky, RoboCop and Pink Panther. Amazon will also get a cable channel: Epix, which MGM owns.
Turner and WarnerMedia still hold the rights to the pre-May 1986 collection, which includes more than 2,000 titles like 'Wizard of Oz' and 'Gone With the Wind.'
WarnerMedia division Turner Classic Movies confirmed to Forbes in an email that Turner and WarnerMedia still hold the rights to MGM’s pre-May 1986 catalog, and noted the company also has a deal with MGM giving them control of many UA films through 2022.
A spokesperson for Amazon declined to comment if when DailyMail.com asked if the company was pursuing these titles.
While Amazon took a victory lap and promoted their announcement, people took to Twitter to vent. Some Tweets were, like Teachout's, were more serious; others were general comical takes.
'Amazon should be broken apart from the warehouses. This MGM nonsense is exactly the wrong direction. Stop the monopoly madness,' Teachout tweeted on Wednesday.
Known for its roaring lion logo, MGM is one of the oldest Hollywood studios, founded in 1924 when films were silent.
A seemingly skeptical Twitter user said, 'Rip #MGM. I hope the roaring lion is not killed. #Amazon #MGMStudios.'
It has a long list of classics in its library, including 'Singin' in the Rain.' More recent productions include reality TV staples 'Shark Tank' and 'The Real Housewives of Beverly Hills,' as well as the upcoming James Bond movie 'No Time to Die' and an Aretha Franklin biopic called 'Respect.'
In addition, MGM has several movies in its pipeline that could be Oscar contenders, The New York Times reported.
That list includes 'Respect,' an Aretha Franklin biopic starring Jennifer Hudson; Ridley Scott's 'House of Gucci,' starring Lady Gaga and Adam Driver; and Paul Thomas Anderson's latest project, which stars Bradley Cooper in his first film since 'A Star is Born' in 2018, according to The Times.
'The real financial value behind this deal is the treasure trove of (intellectual property) in the deep catalog that we plan to reimagine and develop together with MGM's talented team,' Mike Hopkins, senior VP of Prime Video and Amazon Studios, said in a statement announcing the deal. 'It's very exciting and provides so many opportunities for high-quality storytelling.'
The heft price tag is a drop of rain in an ocean for Amazon - $1.6trillion behemoth - but companies that kicked the tires on MGM when it was being quietly shopped in recent months were shocked over the price, according to Variety.
They believed the studio was worth around $5billion to $6billion with the assumption of some debt, Variety reported.
In comparison, Disney paid less for Star Wars and Marvel in two separate purchases when it bought Lucas Films in 2012 for $4billion and Marvel for $4.05billion in 2018.
Amazon already has its own studio but has had mixed results.
Two of its shows, 'The Marvelous Mrs. Maisel' and 'Fleabag,' won best comedy series Emmys, but many of its films have failed to click with audiences at the box office.
Recently, Amazon has been spending on sports and splashy shows. It will stream 'Thursday Night Football' next year and is producing a 'Lord of the Rings' show, which reportedly cost $450million for its first season alone.
The deal, which is subject to customary approvals, will make Amazon, already one of the most powerful and valuable companies in the world, even bigger.
Regulators around the world are scrutinizing Amazon's business practices, specifically the way it looks at information from businesses that sell goods on its site and uses it to create its own Amazon-branded products.
The Amazon-MGM deal comes on the heels over other large media mergers, including AT&T and Discovery, which announced on May 17 that they would combine media companies to create a powerhouse that includes HGTV, CNN, Food Network and HBO.
The movie studio is behind the James Bond franchise, owns the Epix cable channel and makes TV shows, including popular shows like The Handmaid's Tale, Fargo, Vikings and Shark Tank
This is how the streaming services currently stack up. Netflix has by far the biggest number of subscribers and it spends the most but the new Discovery and AT&T company will spend more. Amazon right now spends around $11 billion, but a purchase of MGM could change that equation
A report by the House Judiciary Committee in October called for a possible breakup of Amazon and others, making it harder for them to buy other businesses and imposing new rules to safeguard competition.
Amazon, founded in 1995 as an online bookstore, has become a trillion-dollar giant that does a little bit of everything.
It has a delivery business network that gets orders to people in two days or sooner; sells inhalers and insulin; has a cloud-computing business that powers the apps of Netflix and McDonald's; and has plans to send more than 3,200 satellites into space to beam internet service to Earth.
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