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Amazon to buy MGM Studios for $8.45 billion

Amazon to buy MGM Studios for $8.45 billion

Amazon said on Wednesday it would acquire MGM Studios for $ 8.45 billion, marking its boldest move to date in the entertainment industry and accelerating its streaming ambitions.

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

Amazon said it hoped to leverage MGM’s legendary cinematic history and extensive catalog of 4,000 movies and 17,000 TV shows to help strengthen Amazon Studios, its film and television division.

“The real financial value of this deal is the treasure trove of intellectual property in the comprehensive catalog that we plan to reinvent and develop with the talented team at MGM,” said Mike Hopkins, senior vice president of Prime Video and Amazon Studios. A declaration. “It’s very exciting and offers a lot of high quality storytelling opportunities.”

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

Amazon stocks barely budged with the announcement.

The deal underscores Amazon’s willingness to spend big to stay competitive in the crowded streaming market. Amazon, Netflix, Disney, and other video streaming services have sought to bolster their content libraries to gain subscribers, committing billions of dollars to license content and develop original programming.

Meanwhile, media giants have consolidated further 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 this.

Amazon has been willing to invest heavily in video content as a strategy to increase Prime memberships, which now exceed 200 million worldwide. It 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 boost Amazon’s “theft effect” because it attracts more subscribers. Premium, which in turn tends to spend more. . on the site.

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Amazon has had successes in film and television programming, including “The Big Sick” and “Manchester By The Sea”, winner of the Oscar for Best Original Screenplay in 2017, as well as in 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 1 price tag of $ 465 million, making it arguably one of the most expensive TV series ever made.

Amazon has also put aggressive pressure on sports content, signing a deal with the NFL in May to broadcast Thursday Night Football from 2022.

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

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MGM will make Amazon’s movie and TV library even stronger. The Hollywood studio owns the James Bond catalog and its studio has produced several hit shows; including “The Handmaid’s Tale” and “Fargo”. It also owns the premium cable network Epix and owns a number of popular reality TV 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 company when it emerged from bankruptcy in 2010.

The MGM deal could reinforce Amazon’s antitrust concerns. The company faces ongoing investigations from several federal agencies, state attorneys general and the European antitrust watchdog. The Judicial Chamber’s antitrust subcommittee released a comprehensive report last October which found that Amazon had monopoly power over outside sellers in its market.

On Tuesday in Washington, DC, Attorney General Karl Racine announced he was suing Amazon for antitrust reasons; alleging that the company’s price contracts with third-party sellers had unfairly raised prices for consumers and harmed the market. competition. Amazon dismissed the claims in the lawsuit; saying sellers set their own prices for the products they sell in their marketplace.

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