Amazon.com Inc. is coming upon a deal to buy the Hollywood studio MGM Holdings for almost $9 billion including debt. This pact would turn a film operation organized in the silent era into a streaming asset for the e-commerce giant.
An agreement could be declared as early as this week, people close to the mood said, assuming the chats don’t fall apart at the last moment.
Amazon -on its way for the second largest gain in history
The deal would commemorate Amazon’s second-largest gain in history, behind its $13.7 billion purchase of Whole Foods in 2017. And bring out the premium that content is gripping as streaming wars force consolidation and drive bigger parties to bulk up with aids that help them contend.
The privately traded MGM was rated around $5.5 billion. This includes debt, last December. Its stock price has loomed in recent days, from about $105 a share in mid-May, before talks were noted, to roughly $140 a share Monday morning. The share price reached $150 Monday afternoon after The Wall Street Journal reported news of the normal deal.
The fabled film and TV studio had around $2 billion of long-term debt at the end of March. It has long been deemed in play. But hired investment banks LionTree LLC and Morgan Stanley late last year to start up a formal protocol.
News of the deal conferences first emerged as AT&T Inc. approved to combine its media assets with Discovery Inc. This forms a new company, a pact that is foreseen to spark even further media consolidation.
The talks between Amazon and MGM have been on-again, off-again since the onset of this year, people private to both companies said. Amazon and MGM have been in exclusive talks in recent weeks, the people said. The MGM board was briefed on the matter Sunday. There are no guarantees they will finally reach a consensus.
The studio is famously known for classics such as “Singin’ in the Rain,” as well as “Rocky” and “The Pink Panther.” MGM has a crown of titles, including the James Bond franchise, that, in contemporary Hollywood, is most valuable as an asset that can be used to ride subscriber sign-ups to Amazon’s Prime Video streaming service.
MGM also has a TV studio whose shows comprise the Hulu hit “The Handmaid’s Tale” and FX’s “Fargo.” It also starts the premium pay-TV channel Epix.
MGM shares the James Bond franchise with a company owned by the Wilson/Broccoli family. This co-own the copyright to existing Bond movies and control the future of the franchise. The next James Bond film, “No Time to Die,” was continually delayed due to an ongoing pandemic. Now it is scheduled for release in October.
While Amazon is earning a big library, the MGM classics such as “The Wizard of Oz” and “Gone with the Wind” were sold long ago along with the rest of the pre-1948 catalog. And now it pertains to AT&T’s Warner Bros.
Forbes and The Information recently reported on Amazon’s interest in MGM.
Amazon has expended hundreds of millions of dollars acquiring would-be theatrical releases from major studios. Like Paramount Pictures’ forthcoming “The Tomorrow War” featuring Chris Pratt. It also aggressively sought a deal to stream movies from Sony Pictures Entertainment on its service. Sony Pictures ultimately ended up reaching a multi-year pact with Netflix Inc.
MGM has examined its long-term hedge-fund shareholders for years, several of whom got involved around 2010 with the idea that MGM’s value could be improved through a refresh of its movie and television library. And that they could then exit through an initial public grant or the sale of the studio. A deal would mark a long-awaited win for Anchorage and firms including Highland Capital Management LP and Davidson Kempner Capital Management LP, all of which restored their debt to equity when MGM occurred from insolvency in late 2010.