Amazon Stock Inches Up on News of Blockbuster MGM Acquisition

Earlier on Wednesday, Amazon announced plans to purchase MGM for $8.45 billion

Tony Maglio

Amazon stock (AMZN on the NASDAQ) inched up a few bucks per share following news of its blockbuster MGM acquisition. The stock movement was all pre-market, as AMZN closed Tuesday at $3,259.05 per share and opened Wednesday at $3,274.59.

That’s like $15 per share, but immaterial to the expensive stock on a percentage basis. Since then, shares have come back down about halfway.

The Amazon-MGM talks first became public last Monday. At the time the price tag was reported to be as high as $10 billion. It was since revised down to $9 billion and eventually official at $8.45 billion. None of the talks or price movement really seemed to faze Amazon shareholders one way or the other.

Less than one hour before the stock markets officially opened on Wednesday, Amazon announced plans to buy MGM for $8.45 billion.

The deal follows more than a week of news reports that Amazon was on the verge of completing an acquisition of MGM. The reported price tag was $9 billion. Rumors had been swirling since December that MGM was exploring a sale with an asking price of a reported $5.5 billion, with the 97-year-old studio generally assumed to be pinning its sale hopes on the value of its legacy library that includes the James Bond and Rocky franchises.

As one of Hollywood’s oldest studios, MGM holds one of the largest film archives in the industry. Along with the James Bond and “Rocky” franchises, MGM produces the TV hits “The Handmaid’s Tale” and “Vikings,” as well as reality shows “Survivor” and “The Voice.” The studio’s library includes 4,000 film titles and 17,000 hours of TV programming, all catnip to media companies looking to feed their hungry streaming services with content.

The deal came on the heels of AT&T’s recent deal to spin off WarnerMedia in a merger with Discovery, another indicator of the need for companies with streaming services to gobble up smaller studios or content libraries to feed the streaming beast.

Along with its extensive film and TV library, MGM also owns premium cable network Epix, which earlier this year expanded its partnership with Paramount to make films licensed to the network available on Paramount+. In 2019, the studio grossed just over $23 million at the domestic box office, with the pandemic-delayed 25th Bond film “No Time to Die” slated for an October release in theaters.

Not only does Amazon — with a market cap of more than $1.6 trillion — have deep pockets, but gaining access to MGM’s content is in keeping with its voracious appetite for building its media division. Amazon spent $11 billion in 2020 on movies, TV shows and music for its Amazon Prime service. The company had also recently arranged for Jeff Blackburn, who had left the company in February, to return next month as SVP of a new media division that will include all of the company’s media services, including Amazon Prime, Twitch, Audible, and Amazon Studios.

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