Amazon Spends $8.45 Million on MGM Takeover

On May 26, it was announced that online retail giant Amazon will acquire Metro-Goldwyn-Mayer for a whopping $8.45 million. MGM, the legendary studio behind films like “The Wizard of Oz” and “Gone with the Wind,” has been a staple of American movie production since the Golden Age of Hollywood. Ask any movie-goer, and it’s likely that they’ll recognize the iconic roaring lion which appears before each MGM movie. However, with new ownership in place, how will MGM films fit into the current entertainment landscape?

MGM has long been a titan in the entertainment industry, but after experiencing dire financial problems in the mid-2000s, the company accumulated $4 billion in debt and was faced with bankruptcy in 2010. Following this financial fallout, control of MGM was relegated to its creditors, who decided to explore a sellout last year. Initial talks with Apple and Netflix fell through in Jan. 2020, with both companies citing price as an obstacle to acquisition. In December, MGM set a hefty buyout price of over $5 billion, and by mid-May, the price managed to rise three and a half billion dollars to its current value. This figure includes the studio’s current debt, which will be assumed by Amazon whenever the deal is closed.

This move is nothing new from Amazon, which in recent years has gained a global reputation as an acquisition machine. MGM will now be absorbed into Amazon’s buyout roster, taking its place alongside other prized purchases like The Washington Post ($250M) and Whole Foods ($13.7B). With MGM raking in an estimated $1.6 billion last year, it would seem that the studio’s library of over 4000 films and numerous TV series would result in a handsome return for Amazon. Assets of particular importance are the James Bond movies, which make up the fifth-highest-grossing film franchise of all time. 

But just how useful is MGM to Amazon? Many speculate that the MGM buyout is a complete blunder by Amazon, and that the potential value of MGM’s intellectual property (IP) is insufficient to enhance the Amazon library in any meaningful–or profitable–way. Amazon representatives claim that the prospect of generating new content from already established MGM IP warrants the immense price tag. This implies the creation (and recreation) of new films and series based on older MGM works, all of which would become part of Amazon’s offerings through the Prime Video streaming service.

Although the MGM deal likely will not elevate Amazon Prime Video to the level of Netflix or Disney Plus, the new material gained from the purchase could attract a significant number of first-time subscribers. This could make all the difference for Prime Video’s survival during the ongoing “Streaming Wars,” even though the enormous company has plenty of capital to fall back on.

While it has been announced that the MGM Lion will remain in place, other aspects of the studio’s legacy are subject to change. We could see very different takes on MGM classics in the next few years, but whatever the future may bring, rest assured that no one has seen the last of Metro-Goldwyn-Mayer.

By Mitchell Turner

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