Amazon to acquire iconic Hollywood studio MGM for 8.45 bln USD

Photo taken on Nov. 3, 2010 shows the MGM Tower in Los Angeles, the United States. (Xinhua/Qi Heng)

LOS ANGELES, May 26 (Xinhua) -- U.S. e-commerce giant Amazon announced Wednesday it will acquire Metro-Goldwyn-Mayer (MGM), one of the most iconic Hollywood studios, for 8.45 billion U.S. dollars.

"MGM has nearly a century of filmmaking history and complements the work of Amazon Studios, which has primarily focused on producing TV show programming," said Amazon in a press release, adding that the company will help preserve MGM's heritage and catalog of films, and provide customers with greater access to these existing works.

MGM, founded in 1924, owns one of the world's deepest libraries of premium film and television content. It is home to more than 4,000 films, including James Bond, 12 Angry Men, Basic Instinct, Creed, Rocky, Silence of the Lambs, Stargate, Thelma & Louise, Tomb Raider, The Magnificent Seven, The Pink Panther, The Thomas Crown Affair, and many other icons, as well as 17,000 TV shows, including Fargo, The Handmaid's Tale, and Vikings.

MGM's films and TV shows have won more than 180 Academy Awards and 100 Emmys, Senior Vice President of Prime Video and Amazon Studios Mike Hopkins, noted in the press release.

"The real financial value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM's talented team. It's very exciting and provides so many opportunities for high-quality storytelling," Hopkins added.

Amazon CEO Jeff Bezos said Wednesday during the company's annual shareholder meeting that the company bought MGM because of its "vast, deep catalogue of much beloved intellectual property," The Hollywood Reporter, one of Hollywood's biggest trade publications, reported.

"And with the talent at MGM and the talent at Amazon Studios, we can reimagine and develop that IP for the 21st century," Bezos was quoted as saying by the news outlet.

"It has been an honor to have been a part of the incredible transformation of Metro Goldwyn Mayer. To get here took immensely talented people with a true belief in one vision. On behalf of the Board, I would like to thank the MGM team who have helped us arrive at this historic day," said Kevin Ulrich, chairman of the Board of Directors of MGM.

"I am very proud that MGM's Lion, which has long evoked the Golden Age of Hollywood, will continue its storied history, and the idea born from the creation of United Artists lives on in a way the founders originally intended, driven by the talent and their vision," added Ulrich, noting that the opportunity to align MGM's storied history with Amazon is an inspiring combination.

The mega deal is Amazon's biggest acquisition since it bought Whole Foods in 2017 for 13.7 billion dollars. Although the 8.45-billion-dollar price was reportedly around 40 percent higher than other prospective buyers, the merger will greatly enhance Amazon's competitiveness against other streaming services giants, such as Netflix and Disney+.

Amazon's Prime program, that offers free Amazon shipping, video streaming, music and more, has more than 200 million paid subscribers worldwide, including over 147 million in the United States. Amazon Prime Video, offered as part of Amazon's Prime subscription, is one of the most widely used streaming services available in the country.

The deal, pending regulatory approval, comes amid antitrust investigations into the e-commerce giant. CNBC reported that Amazon "faces ongoing probes by multiple federal agencies, state attorneys general and Europe's antitrust watchdog."

In the latest antitrust suit against Amazon, D.C. Attorney General Karl Racine on Tuesday said the company "has used its dominant position in the online retail market to win at all costs" and "maximizes its profits at the expense of third-party sellers and consumers" in a statement.

The deal comes days after AT&T's announcement of its 43-billion-dollar deal to merge WarnerMedia's premium entertainment, sports and news assets with Discovery's leading nonfiction and international entertainment and sports businesses to create a premier, standalone global entertainment company.

The Amazon-MGM deal "marks the latest major consolidation to rattle the entertainment industry," commented the Hollywood Reporter, noting that Amazon "is battling Netflix (207 million global subs) and Disney+ (103 million subs) for global supremacy among top streamers."

Variety, another top Hollywood trade publication, also pointed out that the pact comes on the heels of AT&T's decision to spin off WarnerMedia and combine it with Discovery, "a deal that many entertainment analysts have predicted will spark a new round of mergers and acquisitions as media companies and streaming players scramble to lock up the most compelling content available."

Variety commented, "For Amazon, snapping up MGM ... is a way to supercharge its Prime Video service with a slew of well-known entertainment titles."

CNBC noted that the deal marks the first time a large technology company has acquired a legacy media company. The New York Times called the deal "the ultimate symbol of one Hollywood era ending and another beginning." The leading newspaper pointed out that "the end of MGM as a stand-alone company adds to a vast reshaping of the media business as the big seek to compete by getting even bigger."

Barron's, a financial outlet published by Dow Jones & Co., said the deal won't change much for the average streaming viewer in the near-term. "But longer term, the deal has implications for many players in the movie and television business, and it could trigger new pressure for streaming services without their own production arms to consolidate as the largest players stock up on controllable content."