Amazon to purchase MGM Studios for $8.45 billion

Amazon stated Wednesday that it’ll purchase MGM Studios for $8.45 billion, marking its boldest transfer but into the leisure business 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 stated it hopes to leverage MGM’s storied filmmaking historical past to assist bolster Amazon Studios, its movie and TV division.

“The actual 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,” stated Mike Hopkins, senior vp of Prime Video and Amazon Studios, in an announcement. “It is very thrilling and gives so many alternatives for high-quality storytelling.”

The deal emphasizes Amazon’s willingness to spend deeply to stay aggressive within the crowded streaming market. Amazon, Netflix, Disney and different video streaming providers 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 better scale to tackle the likes of Amazon and Netflix. Discovery’s $43 billion deal to merge with WarnerMedia after a by-product from AT&T, introduced final week, is the most recent symptom of that.

Amazon has lengthy been keen to make massive investments on video content material as a method 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 location.

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

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

Amazon has additionally made an aggressive push into sports activities content material, inking a deal with 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 could deliver again Jeff Blackburn, previously a high lieutenant to Bezos, to supervise a brand new World Media & Leisure division, which consolidates its leisure choices beneath one heading, together with Prime Video, Amazon Studios, its music and podcasting companies, Amazon Video games and Twitch.

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 exhibits together with “The Handmaid’s Story” and “Fargo.” It additionally owns premium cable community Epix and owns a variety of fashionable actuality TV exhibits, 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 house owners 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 considerations for Amazon. The corporate faces ongoing probes by a number of federal companies, 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.

—CNBC’s Alex Sherman contributed to this report.

This story is creating. Refresh for updates.

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