Amazon (AMZN) has bought one of Hollywood’s major film studios, MGM Studios. The deal is about US$ 8.45 billion.
MGM Studios is the company behind the production of famous films, such as James Bond and The Hobbit. In this way it is hoped that the purchase of the nearly century-old Hollywood icon can meet the demand for streaming content.
“In many ways, MGM is a classic Hollywood studio idea and it tries to maintain that idea long after it is no longer a viable business strategy,” said Professor of Film at the UCLA School of Theater, Film and TV, Jonathan Kuntz. 27/5/2021).
The Reason Amazon Bought MGM
Amazon blatantly wanted to acquire the legendary film company because of the large amount of streaming material. Not to mention, there are opportunities to mine the iconic James Bond and Rocky franchises for new movies and television shows.
Additionally, with retail rivals such as Walmart Inc. launching a more sophisticated online store, Amazon must work harder to keep its 200 million prime customers loyal.
For MGM, the deal provides an end to an era of ups and downs in hedge-fund ownership that began with bankruptcy more than a decade ago.
MGM’s main shareholder is Anchorage Capital Group LLC, which became owner with another investor as part of a bankruptcy agreement in 2010 to write off an estimated US $ 4 billion in debt.
MGM’s earnings before interest, taxes, depreciation and amortization rose 48% to about US $ 307 million last year, supported by profits from its film library of 4,000 titles. But with the lack of new releases, sales fell 3% to US $ 1.5 billion.