Amazon in Talks to Acquire MGM for $9 Billion

Content is King

Amazon (AMZN) is in discussions about buying famed movie studio Metro Goldwyn Mayer. Rumors have swirled for years about an acquisition of MGM, the last independent movie studio in the US. Last year MGM hired bankers to solicit offers, aiming to capitalize on the competition in the streaming service market which has driven demand for content catalogs.

Dealmaking Abounds in the Media Industry

This year is shaping up to be an active one for dealmaking in the media industry. Since the start of 2021, over $80 billion worth of mergers and acquisitions have been announced in the industry. 2021 is on track to be the largest year of M&A for the media industry since 2000.

MGM is attractive to suitors because it boasts a catalog of roughly 4,000 movies including the James Bond series, as well as 17,000 episodes of programming including The Handmaid’s Tale. MGM has been able to remain independent over the years, even as Time Warner (T), 21st Century Fox (FOX), Paramount (VIAC), and other studios were gobbled up by larger media companies.

Amazon Overhauls Media Unit

In a sign of Amazon’s ambitions in the entertainment industry, it recently overhauled its media unit, naming long-time executive Jeff Blackburn as head of Amazon’s entire entertainment division. The business includes Prime Video, Amazon Studios, and Twitch, which is Amazon’s video game streaming website.

Competition in the video streaming market is red hot, prompting major companies in the industry to scramble for content to attract viewers. With more than 200 million Prime members, 175 million of which stream Prime Video each year, Amazon is looking for ways to keep up its momentum through a potential acquisition of MGM.

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