Amazon will be buying MGM for close to $9 billion, it seems, and we could see an agreement announced in the coming week, or at least the Wall Street Journal believes so.One of the top entertainment law firms los angeles BLAKE & WANG P.A takes a closer look at this intriguing development.
MGM was valued at around $5.5 billion, debt inclusive, as of last year. It is listed on the OTC market, and we’ve seen the stock price soar in relation to whispers of the Amazon deal, taking them from $105 a share in middle May to $140 a share last week. It’s currently owned by an investor group headed up by Anchorage Capital, and many have been on board since the studio was salvaged from bankruptcy in 2021. Talks of takeovers are far from novel, but these seem serious.
It would be the second large merger to come out of entertainment spaces this month. AT&T offloading WarnerMedia to Discovery is a development we looked at just last week.
What does Amazon get in return for its bucks? A vast streaming library for Prime Video, for one, and valuable IPs like the James Bond franchise have to hold some appeal. Inside sources also make clear that Amazon’s takeover won’t torpedo the MGM theatrical releases pre-scheduled for this year (for release under United Artists Releasing). Likewise, theatrical P&A budgets for the MGM slate are locked.
Amazon Prime has been a key driver for growth for the company, so it’s hardly surprising they’re willing to invest in better content for the channel. Yet there’s an aspect to this spate of tech-entertainment mergers we’ve seen that hasn’t really been addressed. Silicon Valley has suffered something of a reputation hit in recent years. Where once people saw booming promise, we’ve seen poor working standards, intrusive data gathering, and other aspects sour the average American on the glitter and glamour of tech. Not that that’s harmed their balance sheets all that much, especially with 2020 seeing the desperate need for smart tech solutions boom.
Why the sudden intrusion of tech giants into the entertainment space, however? Obviously, the link is through the streaming boom- it’s the digital platforms they created that has allowed the online space to become such a key aspect of the entertainment industry. Enough so that entertainment giant Disney has entirely remodeled itself to become a tech hybrid just to stay ahead of the game.
Yet it’s the 2020 streaming boom that has led to the disastrous day-and-date releases we’re seeing cripple the theatrical business currently. And, overall, we’re not seeing the tech companies roll these back, either. Where the exhibition industry is recovering worldwide, the US lags, purely because of this conflicting interest. Will Silicon Valley not be happy until it’s wiped out America’s theatrical business? It’s certainly the one distribution arm not thoroughly dependent on the very tech they’re pushing out, after all.
It’s a glum thought indeed, but BLAKE & WANG P.A can’t help but wonder. We’ll be watching carefully as things develop.
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