Amazon is reported to be prepared to pay around $9 billion to acquire MGM. The studio confirmed in December 2020 that it was looking for a buyer, appointing advisors to manage the process. Acquiring the studio even at that price looks like relatively good value for Amazon. It would give Amazon access to a back catalogue of iconic movies, including the James Bond franchise, to bolster its online video service.
Amazon has more than 200 million Prime members, of which 175 million used its video service in the last year. The company spent $11 billion on music, movies and video in 2020. Amazon had net sales of $386 billion in 2020, with a net income of $21 billion.
MGM owns a large library of around 4,000 movie titles, including the James Bond and Rocky franchises, as well as classics like Gone with the Wind and The Wizard of Oz. Its television productions include The Handmaid’s Tale and 17,000 hours of programming. MGM Holdings had revenues of just under $1.5 billion in 2020, of which $588 million was from movies. It had a net income of $34 million.
Metro-Goldwyn-Mayer was formed in 1924 from a combination of motion picture companies and became one of the big five studios in Hollywood. The studio was subsequently bought and sold several times. MGM filed for bankruptcy protection in 2010 and emerged under the ownership of its creditors. It is currently owned by a consortium of investors, led by hedge fund Anchorage Capital.
It is unlikely that Amazon would gain immediate access to the current slate of theatrical releases for its online service, including the latest Bond movie, No Time to Die.
However, it would take MGM off the block, preventing its assets getting into the hands of any other competitors.
News of the talks came shortly after AT&T agreed to combine its WarnerMedia unit with Discovery to create a standalone company. Under the terms of that deal, AT&T would receive $43 billion and its shareholders would receive 71% of the new company, with Discovery shareholders having the rest.