25 MAY 2021

AMAZON NEARS DEAL TO BUY MGM STUDIOS

With the MGM deal, Amazon could continue building its presence in entertainment, and potentially mine the studio's well-known franchises for future series and films.

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Amazon is nearing a deal to acquire MGM Studios, the co-owner of the James Bond franchise and other film and TV series, for between $8.5 billion and $9 billion, according to people familiar with the matter. The deal is expected to be announced as soon as Tuesday or Wednesday.

It would mark Amazon’s biggest acquisition since it bought Whole Foods in 2017 for $13.7 billion. The Wall Street Journal reported earlier Monday that the deal could be announced this week. Amazon is interested in acquiring more TV and film content for its Prime Video service as it competes with Netflix, Disney, and other streaming video services. MGM is a natural fit for any streaming service because of its plethora of content.

With the MGM deal, Amazon could continue building its presence in entertainment, and potentially mine the studio's well-known franchises for future series and films. The retailer has already been working on a "Lord of the Rings'' series — with the first season estimated to cost $465 million, according to The Hollywood Reporter. To put that price tag in context, a season of "Game of Thrones" costs roughly $100 million. In March, Amazon also spent $10 billion on an 11-year deal to get the exclusive rights for the NFL's Thursday NIght Football. 

MGM, which is a private company, has been seeking a buyer for several years. Its owners include Anchorage Capital, Highland Capital Partners, Davidson, Kempner Capital Management, Solus Alternative Asset Management, and Owl Creek Investments — funds that took control of the studio when it emerged from bankruptcy in 2010. MGM owns a number of famed movie and TV franchises, including "Rocky", "Legally Blonde", "The Pink Panther" and "Stargate". It also owns a studio, which has made more current hit TV shows, including “The Handmaid’s Tale” and “Fargo”. Moreover, MGM owns a number of popular reality TV shows, including “Shark Tank,” “Survivor,” “The Real Housewives” series and “The Voice”. The company also owns Epix, a premium pay-TV service valued at about $1.3 billion in 2017.

Going forward, a deal between the two companies could increase antitrust concerns. Colorado Rep. Ken Buck, the ranking member of the House Antitrust committee, said in a statement, "This proposed merger is yet another example of Big Tech’s commitment to total dominance in every sector of our economy. If Congress doesn't act soon, there won’t be a market Big Tech doesn’t control."