Amazon to buy movie and TV studio MGM
Online shopping giant Amazon is buying MGM, the movie and TV studio behind James Bond, Legally Blonde, and Shark Tank, with the hopes of filling its video streaming service with more stuff to watch. Amazon is paying $8.45 billion for MGM, making it the company's second-largest acquisition after it bought grocer Whole Foods for nearly $14 billion in 2017.
Company aims to boost streaming services
The deal is the latest in the media industry that's aimed at boosting streaming services to compete against Netflix and Disney+. AT&T and Discovery announced last week that they would combine media companies, creating a powerhouse that includes HGTV, CNN, Food Network, and HBO.
Amazon will use MGM's vast library to create new content
Amazon doesn't say how many people watch its Prime Video streaming service, but more than 200 million people have access to it because they pay for Prime membership, which gives them faster shipping and other perks. Amazon said on Wednesday that it would use MGM's vast library, which includes famous characters such as Rocky, RoboCop, and Pink Panther, to create new movies and shows.
Bezos is excited about the venture
"It's going to be a lot of fun work," said Amazon founder Jeff Bezos, during the company's shareholder meeting on Wednesday. "People who love stories are going to be the big beneficiaries," he added.
'There is an arms race going on among streaming companies'
Sucharita Kodali, an eCommerce analyst at Forrester Research Inc., said streaming companies need shows people can't watch elsewhere in order to stand out and be competitive. "There is an arms race to get what you can while the window is open," she said. "Plus, the price tag is just a tiny fraction of Amazon's valuation, which is nearing two trillion," Kodali said.
MGM has been struggling since the past few years
Known for its roaring lion logo, MGM is one of the oldest studios in Hollywood, founded in 1924. But its shine has faded considerably over the years. In the mid-1980s, it sold much of its pre-1948 catalog, including The Wizard of Oz and Gone with the Wind, which is now owned by Warner Bros. Its sprawling California lot was bought by Sony.
MGM's 'No Time to Die' has been on hold
For much of the past decade, MGM juggled bankruptcy and a revolving door of owners while its new releases dwindled. MGM's desirability was lessened by the fact that its prized property James Bond isn't owned outright. The release of the latest James Bond entry, No Time to Die, has been on hold through the pandemic, with a fall release now planned.
Amazon has had mixed results
Amazon already has its own studio. Two of its shows, The Marvelous Mrs. Maisel and Fleabag, won the best comedy series Emmys. Although it has won several Oscars, including most recently for Sound of Metal, many of its films have failed to click with audiences.
Amazon's business practices have been under scrutiny
Seattle-based Amazon.com Inc. declined to say when it expects the deal to be finalized. But it will make one of the most powerful and valuable companies in the world even bigger. Regulators around the world are scrutinizing Amazon's business practices, specifically the way it looks at information from businesses that sell goods on its site and uses it to create its own Amazon-branded products.