Amazon Spies MGM Merger: James Bond film company up for sale
June 1, 2021
2 min read
What's going on here?
Amazon is in talks to purchase entertainment company Metro-Goldwyn-Mayer (MGM). The Hollywood studio has been valued at around $9bn.
What does this mean?
MGM is one of Hollywood’s largest production and distribution companies, the studio is responsible for creating franchises such as James Bond and every law student’s favourite, Legally Blonde. Amazon has recently expressed an interest in boosting its production ventures by merging with MGM. The $9bn deal would give Amazon the rights to MGM’s extensive back catalogue of over 4000 films and series, including classics such as Silence of the Lambs but also more recent hits like The Handmaid’s Tale.
The film industry has been hit hard by the pandemic, which is potentially why MGM’s largest shareholder Anchorage Capital is eyeing up the sale. The latest Bond film, No Time to Die, has been postponed four times. With people unable to get to the cinema, streaming sites such as Amazon Prime have only seen an increase in demand for their services, perhaps why they are in a position to consider such a large-scale merger.
What's the big picture effect?
Amazon is clearly looking to expand both its production branch Amazon studios, and streaming service Prime Video. The company spent $11bn last year on producing and acquiring content for its 200 million Prime members. Former amazon executive Jeff Blackburn has recently confirmed he is returning to head up the expanded media branch after spending 20 years away from the company in tech and private equity. Amazon is no stranger to large scale acquisitions. In 2017 it spent an unprecedented $13.4bn to merge with supermarket chain Wholefoods. This deal is set to be the next step in Amazon’s multi-market domination mission.
This potential sale is part of the wider trend towards consolidation within the film industry. Large streaming services such as Netflix, Amazon and Apple TV have been disrupting the traditional model by creating their own content and purchasing production companies. In 2019, 21st Century Fox was acquired by Disney and Universal now operates within Comcast. MGM is one of the few remaining standalone studios. Competition within the streaming industry is fierce and sites need attractive catalogues of content to attract members. By purchasing production giants such as MGM, streaming sites can expand their own filmmaking capacities but also offer much loved classic films once they have acquired the rights.
However, this deal will not be without challenges. Amazon is not the first studio to go into talks with MGM. Both Apple and Comcast have expressed interest in the company, but were only willing to pay around $6bn. This raises questions over how much MGM is really worth. There have also been difficulties over the rights to MGM’s most famous franchise, James Bond. MGM actually only owns 50 percent of the Bond franchise with the other half controlled by siblings Barbara Broccoli and Michael G. Wilson. The pair have creative control over the films and get the final say on key contractual decisions. It is reported they were staunchly against debuting the latest Bond Film on streaming sites. Their feelings behind the merger are unknown but their influence will be a potential sticking point for Amazon to look out for.
Report written by Amber Allen
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