Amazon in talks to buy Hollywood studio MGM for $9bn
Amazon is in talks to acquire MGM, the Hollywood studio behind the James Bond and Rocky franchises, for $9bn (£6.3bn) in the latest deal to secure “crown jewel” content in the global battle for streaming supremacy.
MGM, which put itself up for sale in December, is one of the few Hollywood studios with evergreen, mustwatch franchises not to have been snapped up in the recent wave of huge mergers and acquisitions in the media industry.
The studio has explored a sale several times over the last few years. In January last year it held preliminary talks with Netflix and Apple, among others, but price proved to be a stumbling block.
However, the streaming wars continue to fuel huge inflation in the prices willing to be paid for premium content with the guaranteed ability to attract millions of viewers. Proven global franchises are becoming increasingly scarce and, as a result, rocketing in value.
MGM owns a library of 4,000 film titles and 17,000 hours of TV programming, from Gone With the Wind and The Hobbit to TV hits such as The Handmaid’s Tale. It made $1.5bn in revenues and $33m in profit last year.
While the studio, which was forced into bankruptcy a decade ago after running up a $4bn debt, has developed new franchises such as Rocky spin-off Creed, starring Michael B Jordan, its crown jewel remains the evergreen, 59year-old James Bond franchise.
MGM explored the potential of releasing the next film in the spy franchise – Daniel Craig’s last outing as 007 in No Time to Die – on a digital streaming service while cinemas remained shut during the pandemic. However, offers on the table could not match the income from the global box office if cinema going can return to near normal levels.
After four postponements, the film, which is likely to be the highest-grossing globally this year, is due to premiere in the UK on 30 September and the US on 8 October.
Bond is the fifth most-valuable movie franchise of all time, with its 24 films to date grossing more than $7bn, behind only the Marvel Cinematic Universe, Star Wars, Harry Potter and Spider-Man films. And with a loyal, global fanbase the films can be relied on to bring in about $1bn at the global box office.
Founded in 1924, MGM (AKA Metro-Goldwyn-Mayer) has recorded huge success over the years with films such as The Wizard of Oz, Ben Hur and Singin’ in the Rain, and has changed hands frequently. Owners have included the drinks magnate Edgar Bronfman, the Las Vegas casino billionaire Kirk Kerkorian and CNN’s founder, Ted Turner.
Last year, Amazon spent $11bn on creating, acquiring or licensing TV and film content, up from $7.8bn in 2019. Netflix spent about $17bn last year. Amazon and MGM declined to comment.
Amazon’s move comes as traditional media companies and Silicon Valley giants battle to win subscribers as consumers increasingly shift more of their viewing from traditional TV to streaming services.
Earlier this year, Netflix revealed that lockdown boredom had fuelled a record year for new subscribers as its global base passed 200 million, cementing its position as the world’s biggest streaming service. Amazon, which has also spent billions moving into sports including live streaming Premier League, Champions League and NFL matches, has more than 175 million global users of its Prime Video service.
On Monday, the US telecoms company AT&T, the owner of assets spanning Hollywood studio Warner Bros, home to the Batman and Harry Potter franchises as well as TV hits such as Friends, the HBO network behind Game of Thrones and Succession, and news broadcaster CNN, announced a deal to merge its media division with Discovery to create a global content powerhouse to better compete in the streaming wars.
AT&T completed the $85bn acquisition of Warner Media, formerly known as Time Warner, three years ago. It was Rupert Murdoch’s failure to buy Time Warner that prompted his shock decision four years ago to sell 21st Century Fox, which included the film and TV studios behind the X-Men, Avatar, Deadpool and The Simpsons, admitting that without it his global media empire lacked the scale to compete.
Disney’s $66bn acquisition of the Fox assets gave the world’s largest media company the extra content muscle to successfully join the streaming wars with the launch of Netflix rival Disney+.
In just 18 months the service has raced to more than 100 million subscribers, driven by a vast content library including the Marvel and Star Wars franchises, kids and family films from Frozen to Toy Story and TV series such as Grey’s Anatomy, 24 and The Mandalorian, establishing it as the third major force in global streaming.