Amazon 2022: What’s the Value of MGM (James Bond Movies)?

MGM Library: Only $3.4 Billion?

No Time to Die
Nicola Dove
Amazon had pegged its deal for MGM, which it closed last month, as worth around $8.5 billion. But the actual estimated value of the studio’s library of movies and TV shows is less than half that, the ecommerce giant disclosed Friday.

In its filing with SEC, Amazon detailed the components of the MGM deal, which closed March 17. The assets “primarily consist of $3.4 billion of video content,” with the acquisition price including $4.9 billion of goodwill, which is defined as “the established reputation of a business regarded as a quantifiable asset.”

MGM’s catalog comprises more than 4,000 film titles and 17,000 TV episodes, including franchises like James Bond, Rocky and Legally Blonde. Amazon wants to “reimagine and develop” MGM’s intellectual property “for the 21st century,” as founder Jeff Bezos said.

Amazon bought MGM Holdings for $6.1 billion in cash (net of cash acquired) and assumed $2.5 billion of debt, which “we repaid immediately after closing,” it said in the filing. Amazon added, “Due to the limited amount of time since the MGM acquisition, the valuation of certain assets and liabilities is preliminary and subject to change.”

Amazon, “the effects of the MGM acquisition were not material to our consolidated results of operations,” and therefore the company did not provide a pro-forma breakdown of Q1 results that incorporated MGM. In addition, the acquisition-related costs “were not significant” in the context of Amazon’s massive business operations. The tech company ended March with $36.6 billion in cash and equivalents on its balance sheet.

Following Amazon’s closure of the deal, 2 of MGM exec exited: Michael De Luca, the motion picture group chairman, and Pamela Abdy, the motion picture group president.

The company missed on the bottom line — posting its first net loss in nearly seven years due to a loss in the value of its investment in electric vehicle maker Rivian. Total revenue growth of 7% was its lowest in years, and Amazon forecast Q2 sales to be up just 3%-7% for Q2.