Amazon.com is about to agree to take over Hollywood studios MGM (Metro-Goldwyn-Mayer) Holdings. The Wall Street Journal reports a purchase price of nearly $ 9 billion, including the assumption of debt.
For the first time, a streaming provider could take over a big player from the film business, which began back in the era of silent films. After taking over the organic supermarket chain Whole Foods for $ 13.7 billion in 2017, that would be the second-largest takeover by Amazon.
MGM interesting takeover candidate
The rumors of a possible takeover of MGMs ensure that the film giant has made substantial gains. In mid-May the shares were still quoted at around $ 105, on Whit Monday (not a public holiday in the USA) the shares were quoted well above this at $ 140.
MGM has been trading as a possible takeover candidate for a long time. At the end of last year, MGM hired one WSJ-Article According to the investment banks LionTree LLC and Morgan Stanley with the search for a new owner. The takeover talks were faltering at first, but now the Wirtschaftsblatt quotes an insider who expects the deal to be concluded soon.
Great interest in James Bond
MGM is best known for classics like “Singin ‘in the Rain” as well as “Rocky” and “The Pink Panther”. MGM has an extensive, valuable library, including the James Bond franchise. It could help any streaming service attract new subscribers. The studio also operates a TV studio, whose series “The Handmaid’s Tale” and “Fargo” include. MGM also owns the premium pay-TV broadcaster Epix.
MGM shares the James Bond franchise with a holding company owned by the Wilson / Broccoli family who jointly own the copyrights to the existing Bond films and control the future of the franchise. The next James Bond film, “No Time to Die”, has been repeatedly postponed due to the COVID19 pandemic and is now set to hit theaters in October. In the new Bond, Daniel Craig plays the famous spy again. The new James Bond flick seemed to have piqued the interest of Apple’s film department. In October there were reports of a deal in the hundreds of millions.
“Lord of the Rings” major investment
Amazon has already invested billions of dollars in its film, television and live sports activities to support its Prime membership offering. The company is currently producing a television series based on “Lord of the Rings” with a budget of $ 465 million for the first season.
Competition for this title would come from “Game of Thrones”, which, like “The Mandalorian”, is said to have cost around 100 million US dollars per season. Disney series in the Marvel Universe cost up to $ 25 million per episode, according to the Hollywood Reporter. The license for “The Lord of the Rings” alone is said to have cost Amazon more than 200 million US dollars. The New Zealand government covers part of the production costs: It wants to bear 25 percent of the costs for the first season. That would be about $ 116 million.
Turn over at MGM
The MGM deal with Amazon would mean an abrupt change in the business policy of the film studio. In 2018, then managing director Gary Barber was fired for holding preliminary talks with Apple about a sale. A takeover price of six billion dollars was discussed at the time. The board of directors is chaired by hedge fund manager Kevin Ulrich, co-founder of the New York hedge fund Anchorage Capital Group, MGM’s largest shareholder.
A deal would mark a long-awaited win for Anchorage and other long-time hedge fund owners, including Highland Capital Management LP and Davidson Kempner Capital Management LP. They converted their claims into equity when MGM went through bankruptcy proceedings in 2010.