MGM: Amazon Makes $9 Billion Offer for MGM

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Courtesy of MGM

Amazon is weeks into negotiations on a deal to acquire MGM for about $9 billion, industry sources say.

Sources indicated that Amazon’s interest in acquiring the studio has taken on a new tenor beyond the usual rumor mill.

The deal is being orchestrated by Mike Hopkins, senior VP of Amazon Studios and Prime Video, directly with MGM board chairman Kevin Ulrich, whose Anchorage Capital is a major MGM shareholder.

MGM had already effectively nailed up a “for sale” sign: in December that
the company was looking for a buyer.

Amazon is in talks about a potential deal for MGM, which could run between $7 billion and $10 billion. MGM reps have been whispering to prospective buyers for month about a price tag of $9 billion while others see it as worth about $5 billion.

Last week Amazon announced that Jeff Blackburn, a former high-ranking executive who recently exited the ecommerce giant, will return to Amazon in a new role overseeing a consolidated global media and entertainment group.

Amazon currently has more than 200 million Prime members worldwide, and Jeff Bezos recently told investors that 17.5 million of those streamed Prime Video content in the past year.

The company clearly wants to turn Prime Video into an even bigger habit for its customers worldwide — and a quick way to do that would be to get MGM’s extensive library of titles into the mix.

MGM owns one of the world’s “deepest libraries” of premium film and TV content.

Its 4,000 film titles include the James Bond, Hobbit, Rocky/Creed, RoboCop and Pink Panther franchises, as well as movies like “The Silence of the Lambs,” “The Magnificent Seven” and “Four Weddings and a Funeral.”

The MGM TV library includes approximately 17,000 episodes of programming, including “Stargate SG-1,” “Stargate Atlantis,” “Stargate Universe,” “Vikings,” “Fargo,” “The Handmaid’s Tale,” “Get Shorty,” “Condor,” “Fame,” “American Gladiators,” “Teen Wolf” and “In the Heat of the Night.” Unscripted shows in its portfolio include “The Voice,” “Survivor,” “Shark Tank,” “”The Real Housewives of Beverly Hills” and “The Hills.”

For Amazon, media is a relatively small piece of its gargantuan empire but represents a fast-growing business segment.

In 2020, the company spent $11 billion on TV shows, movies and music for Prime services — up 40% from the year prior.

For the first three months of 2021, MGM Holdings reported revenue of $403.3 million (up 27% year over year) and net income of $29.3 million (versus a net loss of $12.1 million the year prior).