Amazon is set to pay $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.
The deal is the latest in the media industry that’s aimed at boosting streaming services
to compete against Netflix and Disney
Twitter was ablaze with hot takes from critics like Zephyr Teachout – the Fordham
University professor and lawyer who lost to NYS Gov. Andrew Cuomo in 2014
Democratic primary – who say Amazon is a monopoly that should be broken up.
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
deal will be approved by the end of 2021, Variety reported.
During Amazon’s first quarter results, the company said 175 million Prime members
streamed shows last year, and more than 200 million have access to it because they’re
signed up for its Prime membership, which gives them faster shipping and other perks.
Households with Prime memberships typically spend $3,000 a year on Amazon, more
more than twice what households without the membership spend, according to Morgan
Stanley, which is why Amazon wants to invest in Prime.
Brian Yarbrough, a senior analyst at Edward Jones, told The New York Times: ‘More and
more Prime members are using video more often, spending more hours on there, so I
think this is a way to add more content and more talent around movies.
‘This isn’t one studio buying another … If you’re Amazon, the perspective is what’s the
potential for Prime membership, what is the potential for advertising.’
Besides Prime Video, Amazon also has a free streaming service called IMDb TV, where
Amazon makes money by playing ads during movies and shows.
Buying MGM would give Amazon access to 4,000 post-May 1986 films, shows and
famous characters, including Rocky, RoboCop and Pink Panther. Amazon will also get a
cable channel: Epix, which MGM owns.