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Amazon Seals $8.5 Billion Acquisition Deal with MGM

UTC by Ibukun Ogundare · 3 min read
Amazon Seals $8.5 Billion Acquisition Deal with MGM
Photo: Shutterstock

With the purchase, Amazon will have access to the unique potentials of the movie studio, which is known for producing blockbusters.

Nearly one year after the initial statement, Amazon (NASDAQ: AMZN) announces its acquisition of MGM at an $8.5 billion valuation. In these contemporary times, many successful businesses are exploring opportunities outside their familiar industries. A good example is Amazon Prime Video, the multinational technology company’s digital streaming platform. Now, Amazon is looking to run Prime Video and MGM concurrently. The acquisition deal is for Amazon to create timeless content and develop hand-in-hand with the talented team at MGM.

Amazon’s Latest Acquisition

MGM is wealthy with an extensive record of broadly accepted intellectual property. The media company is a popular powerhouse for several epic movie productions for centuries. MGM’s James Bond has recorded the most revenue since its production in 1953, yielding billions of dollars. The addition now makes MGM, its over 4000 movies and 17,000 TV Shows, and all stakeholders subject to Amazon Management. The purchase deal between Amazon and MGM will most likely foster Amazon’s head-on competition with streaming platforms like HBO Max, Disney, and Netflix.

Earlier in March, Amazon submitted the necessary information regarding the deal as requested by the Federal Trade Commission (FTC). A deadline to file any legal conflict by mid-March was set for the Commission. However, the purchase deal closed without conflict from the Federal Trade Commission, contrary to initial fears. Then, Amazon’s announcement came after the deadline expired. So far, there have been no challenges, but the FTC spokesperson Lindsay Kryzak mentioned:

“We reiterate that the Commission does not approve transactions and may challenge a deal at any time if it determines that it violates the law.”

The deal closure is happening when the tech industry is going through scrutiny. The FTC has an antitrust suit against Facebook, and the Justice Department has a lawsuit against Google. The D.C. attorney general filed an antitrust lawsuit against Amazon following the purchase announcement last year. He alleged that Amazon was fixing prices through contract provisions with third-party sellers. However, the EU antitrust commission has approved the deal, saying that Amazon’s purchase of MGM would “raise no competition concerns.”

Benefits for Amazon as It  Acquires MGM

With the purchase, Amazon will have access to the unique potentials of the movie studio, which is known for producing blockbusters. Amazon has produced several TV and movie hits and distributed them on its Prime Video platform with over 175 million subscribers. Another encouragement for acquiring MGM is to help Amazon keep pace in the media landscape. The media scene has seen increased merger and acquisition activities steered by the ever-evolving streaming marketplace.

Furthermore, decades-long MGM productions like Legally Blonde and Rocky will boost the Amazon video catalog, which faces fierce competition from other streaming services and traditional movie studios. Amazon has invested more in entertainment in recent years. The question of how Amazon hopes to run Prime Video and MGM is inevitable, considering its similar functions. Both studios produce movies and TV Shows. Also, Amazon hosts Prime Video on IMDb TV while MGM has Epix. Running these services side-by-side may be unrealistic.

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Ibukun Ogundare

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.

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