Amazon to Buy MGM Studios for $9 Billion. But Why?

Issue 72

Amazon is currently closing in on a deal to buy the Hollywood studio MGM Holdings for what is rumored to be a $9 billion acquisition, according to sources familiar with the matter.

The deal would become the company’s second-largest acquisition ever, falling right behind its $13.7 billion deal for Whole Foods a number of years ago. The move would shift a film studio that was founded in the era of silent movies into a streaming asset for an e-commerce giant, and points further to a shift in consumer behavior towards streaming services as the “Streaming Wars” continue to heat up and the major players feel forced to make drastic plays in order to compete.

MGM has garnered a very large and illustrious film library over the decades, with well over 4,000 movies, shows, and franchises under its belt, including some of the most iconic and memorable such as Gone with the Wind, Rocky, and the Bond series.

Whether MGM’s theatrical slate for 2022 will go directly to Amazon Prime, or maintain theatrical screenings remains unknown. MGM and Amazon have provided no comment in regard to MGM’s 2021 theatrical slate and beyond. Some of the big feature’s MGM has slated for 2021 include an Aretha Franklin biopic Respect, The Addams Family 2, No Time to Die, the Ridley Scott-directed Lady Gaga-Adam Driver pic House of Gucci, a yet to be named Paul Thomas Anderson movie, and Joe Wright’s Cyrano. The upcoming James Bond film, No Time to Die, is certainly slated for a theatrical release though, as the producers have already made it clear that they intend it for the big screen – which offers its own challenges.

MGMs largest asset, the Bond series, is not owned by the company; it is only released by MGM.

The Broccoli family has complete power and say over all things James Bond. You can’t so much as hum the 007 theme song without their approval, and they’ve proven to be very hesitant to hop on the streaming bandwagon and do much of anything but release a Bond movie every few years in as many theaters as they can.

Amazon wants to make big, blockbuster movies though and create franchises that have a wide, global appeal, but has had no success on its own. MGM may or may not be able to offer Bond, but there are plenty of other titles in MGM’s library that are ripe for exploitation - and they aren’t encumbered by cable networks or other legacy businesses that don’t appeal to streaming services.

A potential agreement between the two parties could be announced as early as this week, according to reports from sources close to the situation. Amazon has already paid a ridiculous sum to hop into bed with the “Lord of the Rings” franchise. What’s a few billion more to Bezos? Besides, there are plenty of opportunities for him to have his next shiny toy in MGM’s library of blockbuster titles. All Amazon needed was rights and the producers with the experience and track record to get it done. They now have both.

Source: Brookfield Brief