MGM, founded in 1924, complements Amazon Studios, which has primarily focused on producing TV programming, the companies said. Amazon will help “preserve MGM’s heritage and catalog of films” and provide customers with greater access to these existing works, the companies added.
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For Amazon, snapping up MGM — which has more than 4,000 movies and 17,000 TV shows in its catalog — is a way to supercharge its Prime Video service with a slew of well-known entertainment titles. In addition, Amazon is anticipating being able to mine Metro-Goldwyn-Mayer properties like the Pink Panther, Rocky and, yes, the 007 franchises for new originals.
“The real financial value behind this deal is the treasure trove of [intellectual property] in the deep catalog that we plan to reimagine and develop together with MGM’s talented team,” Mike Hopkins, senior VP of Prime Video and Amazon Studios, said in announcing the deal. “It’s very exciting and provides so many opportunities for high-quality storytelling.”
Hopkins noted that MGM productions collectively have won more than 180 Oscars and 100 Emmys. The studio has roughly 800 employees globally.
The MGM deal is Amazon’s second-largest acquisition, behind its $13.7 billion purchase of Whole Foods in 2017. Amazon didn’t say when it expects to close the MGM acquisition, which is subject to regulatory approvals and other routine closing conditions; however, insiders believe the pact will be approved by the end of 2021. The purchase price includes the assumption of MGM’s debt. MGM will continue to operate as a label under the Amazon brand.
Kevin Ulrich, MGM’s chairman who had worked with Hopkins to hammer out the deal, said in a statement, “I am very proud that MGM’s Lion, which has long evoked the Golden Age of Hollywood, will continue its storied history, and the idea born from the creation of United Artists lives on in a way the founders originally intended, driven by the talent and their vision. The opportunity to align MGM’s storied history with Amazon is an inspiring combination.”
Among the film titles Hopkins called out in announcing the MGM deal were “12 Angry Men,” “Basic Instinct,” “Creed” and “Rocky,” “Legally Blonde,” “Moonstruck,” “Poltergeist,” “Raging Bull,” “Robocop,” “Silence of the Lambs,” “Stargate,” “Thelma & Louise,” “Tomb Raider,” “The Magnificent Seven,” “The Pink Panther,” “The Thomas Crown Affair” — and, of course, the James Bond series. On the TV front, the Amazon exec cited “Fargo,” “The Handmaid’s Tale” and “Vikings.”
The pact comes on the heels of AT&T's decision to spin off WarnerMedia and combine it with Discovery, a deal that many entertainment analysts have predicted will spark a new round of mergers and acquisitions as media companies and streaming players scramble to lock up the most compelling content available.
Companies that kicked the tires on MGM when it was being quietly shopped in recent months had expressed shock over the price that Amazon was willing to pay for the studio. They believed the studio was worth more on the order of $5 billion to $6 billion with the assumption of some debt. That was due in part to the fact that MGM shares the rights to the Bond franchise with Eon Productions. That company, which is run by half-siblings Barbara Broccoli and Michael G. Wilson, has an unusual amount of control over the spy series -- with rights to approve everything from marketing to casting and from distribution to ancillary projects. That means that Amazon may struggle to get their signoff on any move to, say, debut the next Bond film on its streaming service, Amazon Prime.
Under film chief Michael De Luca, MGM has lined up several promising projects, including Ridley Scott's "House of Gucci," Paul Thomas Anderson's "Soggy Bottom" and "Project Hail Mary," an adaptation of Andy Weir's novel that will star Ryan Gosling.
In recent years, Amazon's studio division has shifted its strategy toward more commercial fare such as "Coming 2 America" and "Without Remorse" and away from the awards-driven productions such as "Manchester by the Sea" and "Cold War." It's unclear if De Luca will move to Amazon, but Hollywood insiders believe he will likely play some kind of role at the streamer, possibly even running its film division.
As of the end of the first quarter 2021, Amazon had $73.3 billion in cash, cash equivalents and marketable securities on its balance sheet as well as $31.9 billion in long-term debt. When companies enter into "material definitive agreements," the SEC requires them to disclose details of such transactions in regulatory filings. As of 9:30 a.m. ET Wednesday, Amazon had not filed any disclosures related to the MGM deal, which suggests that Amazon does not consider the $8.45 billion purchase price to be material to its business.
Amazon's deal to buy MGM for nearly $9 billion comes a day after the attorney general for Washington, D.C., filed an antitrust lawsuit against the ecommerce colossus -- alleging Amazon engages in anticompetitive practices including price-fixing that have resulted in higher prices for consumers and "stifled innovation and choice across the entire online retail market."
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