Amazon to acquire MGM for $8.45bn

MGM

Today it has been announced that Amazon will acquire MGM for $8.45bn.

MGM has nearly a century of filmmaking history and complements the work of Amazon Studios, which has primarily focused on producing TV show programming. Amazon will help preserve MGM’s heritage and catalog of films, and provide customers with greater access to these existing works.

“MGM has a vast catalog with more than 4,000 films—12 Angry Men, Basic Instinct, Creed, James Bond, Legally Blonde, Moonstruck, Poltergeist, Raging Bull, Robocop, Rocky, Silence of the Lambs, Stargate, Thelma & Louise, Tomb Raider, The Magnificent Seven, The Pink Panther, The Thomas Crown Affair, and many other icons — as well as 17,000 TV shows—including Fargo, The Handmaid’s Tale, and Vikings — that have collectively won more than 180 Academy Awards and 100 Emmys,” said Mike Hopkins, Senior Vice President of Prime Video and Amazon Studios.

“The real financial value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team. It’s very exciting and provides so many opportunities for high-quality storytelling.”

Kevin Ulrich, Chairman of the Board of Directors of MGM said: “It has been an honor to have been a part of the incredible transformation of Metro Goldwyn Mayer. To get here took immensely talented people with a true belief in one vision. On behalf of the Board, I would like to thank the MGM team who have helped us arrive at this historic day.

“I am very proud that MGM’s Lion, which has long evoked the Golden Age of Hollywood, will continue its storied history, and the idea born from the creation of United Artists lives on in a way the founders originally intended, driven by the talent and their vision. The opportunity to align MGM’s storied history with Amazon is an inspiring combination.”

Completion of this transaction is subject to regulatory approvals and other customary closing conditions.

Industry reaction

Don Scales, who has led over 40 merger and acquisition transactions and is ForbesBook author of M&A Solution: A Values-Based Approach To Integrate Companies. He spoke to Business Leader about the merger.

Amazon and MGM share a culture of content. This shared culture will serve the acquisition well. Amazon cares about creating a powerful content library for Amazon Prime Video, and MGM has content in spades through its titles. But more importantly, since entering the streaming business, Amazon has consistently shown that the company is a steward for good-quality content, having developed Oscar-caliber entertainment.

Every company has a culture. Every company has a set of values. Every company has leaders. When considering an acquisition—either as the acquirer or the acquiree—you must understand the culture and values of the other company and how its leadership interacts with employees and customers.

But where Amazon and MGM may clash: a culture of control, which may become a problem with the James Bond franchise that MGM owns partially. Amazon has a reputation of wanting to manage the entire content creation and distribution process. But MGM does not own creative control over James Bond even though MGM owns many James Bond titles. Eon Productions has creative control over how the James Bond brand is used. When you make sure that everyone in your company knows what you stand for, you have set the foundation for a successful acquisition—but only if you also make sure you carry those values into the acquisition process.

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