Amazon to purchase MGM Studios for $8.45 billion

Amazon mentioned Wednesday that it’ll purchase MGM Studios for $8.45 billion, marking its boldest transfer but into the leisure trade and turbocharging its streaming ambitions.

The deal is the second-largest acquisition in Amazon’s historical past, behind its $13.7 billion buy of Complete Meals in 2017.

Amazon mentioned it hopes to leverage MGM’s storied filmmaking historical past and wide-ranging catalog of 4,000 movies and 17,000 TV reveals to assist bolster Amazon Studios, its movie and TV division.

“The true monetary worth behind this deal is the treasure trove of IP within the deep catalog that we plan to reimagine and develop along with MGM’s proficient workforce,” mentioned Mike Hopkins, senior vp of Prime Video and Amazon Studios, in an announcement. “It’s totally thrilling and offers so many alternatives for high-quality storytelling.”

In an announcement, MGM Chairman Kevin Ulrich mentioned: “The chance to align MGM’s storied historical past with Amazon is an inspiring mixture.”

Shares of Amazon barely moved on the announcement.

The deal emphasizes Amazon’s willingness to spend deeply to stay aggressive within the crowded streaming market. Amazon, Netflix, Disney and different video streaming companies have been seeking to beef up their content material libraries to win over subscribers, committing billions towards licensing content material and creating unique programming.

In the meantime, media juggernauts have undergone additional consolidation to attain larger scale to tackle the likes of Amazon and Netflix. Discovery’s $43 billion deal to merge with WarnerMedia after a derivative from AT&T, introduced final week, is the newest symptom of that.

Amazon has lengthy been keen to make huge investments on video content material as a technique to buoy Prime memberships, which now surpass 200 million globally. It spent $11 billion on video and music content material final 12 months, up from $7.8 billion in 2019. CEO Jeff Bezos has argued that these investments reinforce Amazon’s “flywheel impact,” in that it attracts extra Prime subscribers, who in flip, are likely to spend extra on the positioning.

Amazon has landed hits in movie and tv programming, together with “The Huge Sick” and “Manchester By The Sea,” winner of the 2017 Academy Award for greatest unique screenplay, in addition to collection “The Marvelous Mrs. Maisel” and “Clear.”

One other carefully watched undertaking, an adaptation of “Lord of the Rings,” is at the moment in manufacturing. “Lord of the Rings” has a season one price ticket of $465 million, probably making it one of the vital pricey tv collection ever made.

Amazon has additionally made an aggressive push into sports activities content material, inking a take care of the NFL in Might to broadcast Thursday Evening Soccer beginning in 2022.

Amazon has a seasoned consultant in Hollywood. The corporate introduced final week that it will deliver again Jeff Blackburn, previously a prime lieutenant to Bezos, to supervise a brand new International Media & Leisure division, which consolidates its leisure choices below one heading, together with Prime Video, Amazon Studios, its music and podcasting companies, Amazon Video games and Twitch.

James Bond wears Tom Ford’s knitted sleeve bomber jacket

Courtesy of Sony

MGM will make Amazon’s TV and movie library much more sturdy. The Hollywood studio owns the James Bond catalog and its studio has made a number of hit reveals together with “The Handmaid’s Story” and “Fargo.” It additionally owns premium cable community Epix and owns quite a few well-liked actuality TV reveals, together with “Shark Tank,” “Survivor” and “The Actual Housewives” collection.

MGM, which is a personal firm, has been in search of a purchaser for a number of years. Its homeowners embrace Anchorage Capital, Highland Capital Companions, Davidson, Kempner Capital Administration, Solus Various Asset Administration and Owl Creek Investments — funds that took management of the studio when it emerged from chapter in 2010.

The MGM deal may heighten antitrust issues for Amazon. The corporate faces ongoing probes by a number of federal businesses, state attorneys basic and Europe’s antitrust watchdog. The Home Judiciary antitrust subcommittee issued a sweeping report final October that discovered Amazon has monopoly energy over third-party sellers on its market.

The acquisition announcement comes at some point after new antitrust claims had been levied towards Amazon. On Tuesday, Washington, D.C., Lawyer Normal Karl Racine introduced he is suing Amazon on antitrust grounds, alleging the corporate’s pricing contracts with third-party sellers have unfairly raised costs for customers and harmed competitors. Amazon pushed again towards the lawsuit’s claims, saying that sellers set their very own costs for the merchandise they promote on its market.

—CNBC’s Alex Sherman contributed to this report.

This story is creating. Refresh for updates.

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