Amazon to acquire famed movie studio MGM for $8.5bn

SAN FRANCISCO: Amazon will buy MGM, the famed movie studio home to the James Bond franchise, for $8.45 billion, giving it a huge library of films and TV shows and ramping up competition with streaming rivals led by Netflix and Disney+.

The deal aims to bolster Amazon’s television-focused studio with new and historic filmmaking from MGM, which has snapped up lucrative series including ‘Rocky’ and ‘Tomb Raider’ since its founding in 1924. Privately-held MGM, or Metro Goldwyn Mayer, also owns the Epix cable channel and makes popular TV shows including ‘Fargo’, ‘Vikings’ and ‘Shark Tank’.

Amazon’s founder Jeff Bezos laid out the rationale for the deal at the company’s annual shareholder meeting. “MGM has a vast, deep catalog of much-beloved intellectual property,” he said. “With the talented people at MGM and the talented people at Amazon Studios, we can reimagine and develop that IP for the 21st century.”

Bezos said it was “premature” to name Amazon Studios as the fourth pillar of the company after its seller marketplace, cloud division and Prime, but it was working toward that milestone.

More than 175 million Prime members watched content on Amazon in the past year, and streaming hours were up 70%. July 5 – the day Amazon was incorporated in 1994 – will be the date Andy Jassy takes over as CEO, he said.

Amazon’s Prime Video faces a long list of rivals including Netflix, Disney+, HBO Max and Apple TV+. The companies have increased spending and expanded in international markets, capturing the pandemic-led shift to binge watching shows online.

Amazon has also courted fans of live sports and picked up licenses to stream games, boasting a long-term deal with the National Football League that was estimated to cost about $1 billion per year.

Amazon’s Hollywood studio purchase is a first for a big US tech company and could spark further interest in Silicon Valley. The acquisition is Amazon’s second-biggest after Whole Foods Market, which it bought for $13.7 billion in 2017.

At the same time, Amazon posted its fourth consecutive record quarterly profit in April. MGM started a formal sale process in December when it was estimated to be worth about $5.5 billion.

Amazon has picked up Academy Awards over the years and slowly moved from art-house fare toward content with wider appeal. The MGM acquisition accelerates that move, giving it rights to James Bond, one of the most lucrative franchises in film history that have earned nearly $7 billion at the box office globally.

Other classic films in MGM’s library include ‘RoboCop’, ‘Moonstruck’ and ‘The Silence of the Lambs’. MGM also licenses content for video games, which could benefit Amazon’s development efforts.

In many cases, MGM’s content is tied up in multi-year deals with television networks. Amazon cannot simply air MGM’s reality show “The Voice,” for instance, which contractually is in the hands of NBC.

Bringing a new installment of the James Bond saga online instead of in theaters would be a particularly difficult task. The terms under which MGM acquired the franchise leave control in the hands of the film’s producers Broccoli family.

Barbara Broccoli and Michael G. Wilson of Eon Productions said in a statement, “We are committed to continuing to make James Bond films for the worldwide theatrical audience.”