Amazon buys MGM
After speculation and excitement building for over a week, Amazon has announced it has made a deal to purchase the legendary MGM- Metro Goldwyn Mayer film and TV company for a neat $8.45 billion. This means a whopping extra 4,000 films and 17,000 hours of TV in Amazon Prime's hands.
In a statement, MGM Chairman Kevin Ulrich said: “The opportunity to align MGM’s storied history with Amazon is an inspiring combination.”
“The real financial value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team,” said Mike Hopkins, senior vice president of Prime Video and Amazon Studios. “It’s very exciting and provides so many opportunities for high-quality storytelling.”
It is the second-largest investment in Amazon’s history, behind its $13.7 billion purchase of Whole Foods in 2017. Also having purchased Audible, Ring, Twitch and more for around $300 million each. Amazon has been prepared to subsidize on video content for some time as a strategy to increase the numbers of Prime memberships being purchased, which now surpass 200 million globally, and to keep up with the ever-growing number of streaming services and a competitive market.
Although streaming is a small part of Amazon as a whole, the company has focused on becoming a more key player in the entertainment world recently. For example, a highly anticipated series based on "The Lord of the Rings" is in the works. It spent $11 billion this year on rights to different content, up from $7.8 billion in 2019. The company also ramped up spending on video and music content in 2020 as consumers spent more time indoors and watching their favorite TV shows amid the coronavirus pandemic. Amazon has also made a strong advance into sports content, signing a deal with the NFL in May to broadcast Thursday Night Football starting in 2022.
At the same time, plenty of media-giants have been incorporating to attempt to reach a wider network of viewers to compete with the likes of Amazon and Netflix. Discovery’s $43 billion deal to merge with WarnerMedia after a spinoff from AT&T, announced last week, is the latest sign of that.
Apple and Comcast had also been competing to buy MGM, which is controlled by US hedge fund Anchorage Capital and a wide variety of financial investors, according to people briefed on the talks. Amazon proved to be superior in the decision as it was prepared to pay roughly $3 billion more than its closest competitor, the people added.
The company announced last week that it would bring back Jeff Blackburn, formerly a top lieutenant to Bezos, to oversee a new Global Media & Entertainment division, which consolidates its entertainment offerings under one heading, including Prime Video, Amazon Studios, its music and podcasting businesses, Amazon Games and Twitch.
Shares of Amazon barely moved on the announcement.
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