Amazon to buy MGM Studios for $ 8.45 billion

Amazon said Wednesday that it will acquire MGM Studios for $ 8.45 billion, marking its boldest move yet in the entertainment industry and accelerating its streaming ambitions.

The deal is the second-largest acquisition in Amazon’s history, behind its $ 13.7 billion purchase of Whole Foods in 2017.

Amazon said it hopes to leverage MGM’s film history and extensive catalog of 4,000 movies and 17,000 television shows to help bolster Amazon Studios, its film and television division.

“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 the talented team at MGM,” said Mike Hopkins, senior vice president of Prime Video and Amazon Studios, in a statement. . “It is very exciting and offers many opportunities to tell high-quality stories.”

In a statement, MGM President Kevin Ulrich said: “The opportunity to align MGM’s history with Amazon is an inspiring combination.”

Amazon shares barely moved with the announcement.

The deal underscores Amazon’s willingness to spend heavily to remain competitive in the crowded streaming market. Amazon, Netflix, Disney, and other video streaming services have been looking to strengthen their content libraries to gain subscribers, committing billions to license content and develop original programming.

Meanwhile, the media giants have further consolidated to scale to take on companies like Amazon and Netflix. Discovery’s $ 43 billion deal to merge with WarnerMedia after an AT&T spin-off, announced last week, is the latest symptom of that.

Amazon has been willing to invest heavily in video content as a strategy to boost Prime memberships, which now exceed 200 million worldwide. Spent $ 11 billion on video and music content last year, up from $ 7.8 billion in 2019. CEO Jeff Bezos has argued that these investments reinforce Amazon’s “flying effect” as it attracts more subscribers. Prime, who in turn tend to spend more. in the place.

Amazon has had success stories in television and film programming, including “The Big Sick” and “Manchester By The Sea,” which won the 2017 Academy Award for Best Original Screenplay, as well as the series “The Marvelous Mrs. Maisel” and “Transparent”. “

Another closely watched project, an adaptation of “The Lord of the Rings,” is currently in production. “The Lord of the Rings” has a season one price of $ 465 million, probably making it one of the most expensive television series ever made.

Amazon has also made an aggressive push on sports content, signing a deal with the NFL in May to broadcast Thursday Night Football starting in 2022.

Amazon has an experienced representative in Hollywood. The company announced last week that it was bringing back Jeff Blackburn, previously a senior Bezos deputy, to oversee a new Global Media & Entertainment division, consolidating its entertainment offerings under a single heading, which includes Prime Video, Amazon Studios, your music and podcasting. companies, Amazon Games and Twitch.

James Bond wears Tom Ford’s woven sleeve bomber jacket

Courtesy of Sony

MGM will make Amazon’s movie and TV library even stronger. The Hollywood studio owns the James Bond catalog and their studio has made several hit shows like “The Handmaid’s Tale” and “Fargo.” It also owns the premium cable network Epix and owns a number of popular reality shows, including the series “Shark Tank,” “Survivor,” and “The Real Housewives.”

MGM, which is a private company, has been looking for 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 firm when it emerged from bankruptcy in 2010.

The MGM deal could heighten Amazon’s antitrust concerns. The company faces ongoing investigations by multiple federal agencies, state attorneys general and Europe’s antitrust watchdog. The House Judiciary antitrust subcommittee issued a comprehensive report last October that found that Amazon has monopoly power over outside sellers in its market.

The acquisition announcement comes a day after new antitrust claims were filed against Amazon. On Tuesday, Washington, DC, Attorney General Karl Racine announced that he was suing Amazon on antitrust grounds, alleging that the company’s price contracts with outside sellers have unfairly raised prices for consumers and hurt competition. Amazon rejected the lawsuit’s claims, saying that sellers set their own prices for the products they sell in their market.

—CNBC’s Alex Sherman contributed to this report.

This story is unfolding. Please update for updates.

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