Amazon and Metro Goldwyn Mayer (MGM) on Wednesday announced a definitive merger agreement for Amazon to acquire MGM for $8.45 billion. Completion of this transaction is subject to regulatory approvals and other customary closing conditions.
MGM primarily made feature films and TV shows since it turned on its studio cameras in 1924. Now, MGM will complement Amazon Studios in an effort to “preserve heritage and catalog of films.”
The merger provides Amazon’s customers with greater access to MGM’s existing works, according to both companies.
MGM will bring to Amazon’s table more than 4,000 movies and 17,000 TV shows. All totaled, MGM productions over the years won more than 180 Oscars and 100 Emmy awards. The studio has roughly 800 employees globally.
Amazon gains this vast catalog of programming to invigorate its Prime Video service with an overstock of well-known entertainment titles. Even more enticing for viewers is the potential to see new originals that Amazon can create from its access to MGM properties.
“The real financial value behind this deal is the treasure trove in the deep catalog that we plan to re-imagine and develop together with MGM’s talented team. It is very exciting and provides so many opportunities for high-quality storytelling,” said Mike Hopkins, senior vice president of Prime Video and Amazon Studios.
Not the First Attempt
A collection of private equity firms currently owns MGM Holdings Inc. This group includes Anchorage Capital Group, Highland Capital Management, and Solus Alternative Asset Management.
The company reportedly has a market value of around $5.5 billion, based on privately traded shares and debt. Amazon assumes MGM’s debt as part of the deal. MGM will continue to operate as a label under the Amazon brand.
Various news sources have reported the possibility earlier of a pending sale. Some accounts suggested the high asking price, in part, chased away early interest.
Initial reports that MGM was on the market emerged last December. The first report that Amazon was courting MGM for purchase surfaced last week.
Fluid Film Industry
MGM’s purchase comes at a time of considerable film industry consolidation, especially as streaming companies are trying to bolster their content libraries to compete with Netflix and Disney.
AT&T, which has had a zipper on its TV and video offerings, on May 17 announced a definitive agreement to combine WarnerMedia’s premium entertainment, sports and news assets with Discovery’s leading nonfiction and international entertainment and sports businesses to create a standalone global entertainment company. That deal created the world’s second-largest media firm by revenue, trailing only Disney.
Both companies have their own streaming services — HBO Max and Discovery Plus. That deal could lead to combining those into a single service.
Amazon’s purchase of MGM is the giant retailer’s second-largest acquisition. Its purchase of Whole Foods in 2017 for $13.7 billion remains the largest to date.
Lion’s Roar Not Silenced
In announcing the deal, Hopkins listed some of the well-known cinematic properties cinched in the deal with Amazon. These include:”12 Angry Men,” “Basic Instinct,” “Creed,” “Rocky,” “Legally Blonde,” “Moonstruck,” “Poltergeist,” “Raging Bull,” and “Robocop.”
Those classic films also include: “Silence of the Lambs,” “Stargate,” “Thelma & Louise,” “Tomb Raider,” “The Magnificent Seven,” “The Pink Panther,” “The Thomas Crown Affair,” and the James Bond series.
“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,” said Kevin Ulrich, chairman of MGM.
With the MGM titles tucked away on its shelves, Amazon is positioned to expand its video business. The popular Amazon Prime membership currently includes access to thousands of Prime Video titles at no additional cost.
Some 200 million people worldwide subscribe to Amazon Prime. Over 175 million streamed video last year. Those totals will doubtlessly expand as Amazon’s customers access the MGM titles.