Amazon is set to clinch a deal to buy Hollywood studio MGM for 'almost $9 billion' this week, sealing a tie-up that's been talked about for the past week as the streaming wars heat up even further.
The deal would significantly strengthen Amazon Prime's hand in the ongoing streaming wars, bringing box office hits such as the James Bond and Hobbit franchises to the platform.
The Wall Street Journal reported the deal could happen 'as early as this week', after weeks of speculation that the move was happening.
Metro-Goldwyn-Mayer, the last standalone American studio, which owns storied franchises such as the James Bond and Rocky stable of films, would significantly bulk up Amazon's catalog, giving it a huge boost for its Prime Video service to compete against the likes of Netflix, Hulu and Disney+.
The news of an MGM purchase comes after AT&T announced it would hive off its WarnerMedia entertainment and news assets and merge them with Discovery's - creating a $150 billion behemoth.
The combined AT&T-Discovery company, which doesn't yet have a name, would likely spend around $20 billion a year on original content. Last year, Amazon spent around $11 billion on its own content. An MGM deal could change that equation.
Jeff Bezos's Amazon is nearing a deal to purchase Metro-Goldwyn-Meyer for $9 billion, according to reports
The deal would significantly enhance Amazon's Prime Video streaming service, which is locked in a fierce battle with Netflix, Apple and Disney for streaming supremacy
MGM's stable includes commercial and critical hits like The Handmaid's Tale, starring Elizabeth Moss
The Jeff Bezos-founded company, with a market cap of $1.6 trillion, brought in nearly $390 billion in revenue last year.
The company also has its own Amazon Studios division which is currently filming a television version of The Lord of the Rings.
MGM has about 4,000 films in its catalog, according to the New York Times. Classics such as Dances With Wolves, Rain Man and the Terminator movies are housed at the studio. And newer productions made for TV, such as the Handmaid's Tale and Shark Tank, also are part of the studio's portfolio.
This is how the streaming services currently stack up. Netflix has by far the biggest number of subscribers and it spends the most but the new Discovery and AT&T company will spend more. Amazon right now spends around $11 billion, but a purchase of MGM could change that equation
The purchase would bring one of Hollywood's most storied names into the Big Tech fold. Apple and Comcast had both looked at possibly purchasing MGM, the Times reported: Both companies determined the studio was worth around $6 billion, so the Amazon purchase would be a big premium over those calculations.
MGM was once home to 'more stars than the heavens,' co-founder Louis B. Mayer would brag, according the times. They included Judy Garland, Clark Gable, James Stewart and Mickey Rooney at at one time or another.
Meanwhile, Amazon is looking to consolidate its film and television offering as it seeks to keep Prime Video competitive with streaming sites Netflix and Disney+, The Information reported.
The ecommerce giant fared well at the recent 93rd Academy Awards, scooping up 12 nominations for films including 'Sound of Metal', 'Time', and 'One Night in Miami'. But Amazon is said to want to vastly expand its production capabilities to keep up with rival studios and streamers.
In March, the tech company signed a ten-year agreement with the National Football League - becoming the first streaming service to secure an exclusive broadcast deal.
This is how the major streaming services stack up. Netflix and Amazon Prime are the clear industry leaders but Disney and others, including Discovery, continue to invest in content
The movie studio is behind the James Bond franchise, owns the Epix cable channel and makes TV shows, including popular shows like The Handmaid's Tale, Fargo, Vikings and Shark Tank
MGM postponed the release of the latest Bond film - No Time to Die - four times. It is now set for release on October 8 in the US and September 30 in the UK
Prime Video will feature one pre-season game per year as well as 15 regular season football games starting in 2023.
In another sign Amazon will increasingly focus on entertainment, the company announced last week former high-ranking executive Jeff Blackburn would return to oversee a consolidating global media and entertainment group.
The ecommerce company said recently it has reached 200 million subscribers on Prime Video.
In December, MGM said it was exploring a sale. It said it had tapped investment banks Morgan Stanley and LionTree LLC, and started a formal sale process.
At the time, the company had a market value of around $5.5 billion, based on privately traded shares and including debt, Reuters reported.
MGM would be the latest in a line of Hollywood studios to get taken over by a massive corporation.
Universal now operates within Comcast; Paramount through ViacomCBS; and Fox under Disney.
Earlier this month rival AT&T announced it was merging WarnerMedia and Discovery to create a new streaming service and the second largest media company in the world in terms of revenue, after Disney.
In December, the movie studio said it was exploring a sale. It said it had tapped investment banks Morgan Stanley and LionTree LLC, and started a formal sale process
Many studios have been hard hit by the coronavirus pandemic as cinemas across the world were forced to close for more than 12 months.
MGM postponed the release of the latest Bond film - No Time to Die - four times. It is now set for release on October 8 in the US and September 30 in the UK.
Netflix had engaged in talks with MGM to release the film on its streaming platform in fall last year but said the cost was prohibitive after discussions broke down.
Netflix was one of the big winners of the pandemic, seeing a surge in subscribers as people the world over were confined to their homes.
Traditional US media companies are now trying to re-invent themselves as streaming services to keep up with the streaming giant.
Disney, Apple, and Comcast have all recently launched streaming platforms with global ambitions. Hulu, Starz, and Paramount+ have also joined the highly-competitive market.
An Amazon spokeswoman said they don't comment on rumors and speculation.
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