MGM Sold to Amazon for $8.45 Billion in Blockbuster Deal - Hollywood Reporter
The tech giant will add a big collection of Hollywood classics and potential franchises to its Prime membership mix.
The acquisition, revealed just days after AT&T announced a $43 billion plan on May 17 to spin off its WarnerMedia division, including HBO and Warner Bros., to Discovery, marks the latest major consolidation to rattle the entertainment industry. Amazon, led by CEO Andy Jassy and founder Jeff Bezos — who has pushed the tech giant further into Hollywood — recently enlisted Jeff Blackburn to rejoin the Seattle-based company as head of global media and entertainment, overseeing divisions from games to audio and video, with a June 7 start date.
Amazon — which disclosed in April that 175 million Prime members have viewed movies and TV shows on its platform in the past year — is battling Netflix (207 million global subs) and Disney+ (103 million subs) for global supremacy among top streamers. Among its original scripted fare, Amazon launched Barry Jenkins' limited series The Underground Railroad this month, its The Marvelous Mrs. Maisel is a perennial Emmy nominee and its biggest upcoming bet is a pricey The Lord of the Rings series. Amazon earned Oscar nominations this year with Sound of Metal, One Night in Miami and sequel Borat Subsequent Moviefilm, among other titles. The studio has picked up films like Eddie Murphy comedy Coming 2 America (Paramount) and the upcoming Everybody's Talking About Jamie (New Regency) and aggressively moved to nab live NFL rights, including Thursday Night Football, from Fox beginning in 2022. Last year alone, Amazon spent $11 billion on video and music content for Prime Video and Amazon Music.
Now, it will add a vast collection of Hollywood classics and franchises to its mix. MGM boasts a film library of around 4,000 titles and 17,000 hours of TV programming, including the Bond, Rocky/Creed and The Hobbit film franchises. The 25th installment in the Bond series, No Time to Die, was delayed multiple times to Oct. 8, 2021, as the pandemic has slowed a box office recovery. (The Bond franchise rights are co-owned by Eon Productions, run by Michael G. Wilson and Barbara Broccoli.) Additionally planned for this year is Ridley Scott's House of Gucci, starring Lady Gaga, and animated sequel The Addams Family 2.
MGM also boasts one of the largest collections of classic Hollywood titles, including 1980's Raging Bull, 1987's Moonstruck, and 1991's Thelma & Louise and Silence of the Lambs. (In unveiling the buy, Amazon stated that MGM's film catalog "complements the work of Amazon Studios, which has primarily focused on producing TV show programming.")
MGM's top shareholder is Anchorage Capital, run by former Goldman Sachs executive Kevin Ulrich, who leads the studio's board of directors. The company has gone without a single CEO since March 2018 when Gary Barber, the Spyglass Entertainment founder who joined MGM after it emerged from bankruptcy in 2010, was abruptly fired. Multiple senior execs form the "office of the CEO" and report to the board of directors of the firm. Ulrich, in the deal announcement, stated: "The opportunity to align MGM's storied history with Amazon is an inspiring combination."
Much of MGM's revenue comes from licensing deals for its vast film and television content library, its public disclosure in June 2020 showed. The Beverly Hills-based studio disclosed a round of layoffs last April that impacted 50 staffers out of its 750 employees while senior management took "voluntary pay reductions" amid the film and TV shutdown during the pandemic.
The studio's film group is led by chairman Michael De Luca, the New Line Cinema and DreamWorks veteran who joined MGM in January 2020. The TV side is overseen by Mark Burnett, the reality format mogul who arrived at the firm in 2015 after spearheading shows like NBC's The Apprentice and CBS' Survivor.
MGM TV produces Hulu's The Handmaid's Tale, FX's Fargo and History's Vikings, and the studio has a stake in unscripted offerings like NBC's The Voice and CNBC's Shark Tank. The studio has grown through acquisitions like Evolution Film & Tape, Inc., the makers of The Real Housewives of Orange County, and Big Fish Entertainment, which produces Live Rescue.
In 2017, MGM acquired full ownership of premium pay TV network Epix — whose original series include Godfather of Harlem, Get Shorty and Britannia — from Lionsgate and Viacom for $1.031 billion and installed former TBS and TNT vet Michael Wright as president. MGM launched Epix Now as a stand-alone streaming service in February 2019 at a price of $6 a month. While the company didn't break out subscriber numbers in its latest earnings release, MGM disclosed that revenue from Epix totaled $111 million for the three months ending in September 2020.
The sale of MGM marks the newest chapter for the venerable studio whose history dates back nearly a century. Metro-Goldwyn-Mayer was founded in 1924 by movie theater chain mogul Marcus Loew. The studio put into production as one of its first releases the silent epic Ben-Hur, an early hit that would be remade multiple times, including 1959's Oscar-winning version and 2016's costly big-budget misfire. It also produced The Wizard of Oz and the highest domestic grossing film of all time adjusted for inflation, 1939's Gone With the Wind. MGM signed up a large roster of Hollywood stars like Myrna Loy, Clark Gable and Joan Crawford who bolstered the studio's early years and in subsequent decades backed Oscar winners The Apartment (1960) and West Side Story (1961).
In 1969, as the studio disclosed a loss, financier and Las Vegas hotel owner Kirk Kerkorian nabbed control over MGM from Edgar Bronfman, who had been the firm's largest shareholder. Shortly thereafter, MGM moved its corporate headquarters from New York to Culver City. The 1970s would also see the launch of one of MGM's most enduring franchises when Sylvester Stallone's Rocky, made for around $1 million, became a $100 million-plus box office blockbuster and claimed the best picture Oscar at the 49th Academy Awards in 1977.
In 1980, Kerkorian split the film holdings from his resort holdings, which currently trade as MGM on the New York Stock Exchange. A year later, MGM acquired distributor United Artists for $380 million from Transamerica shortly after UA financed Michael Cimino's infamous box office bomb Heaven's Gate, which grossed $3.5 million on a budget of $44 million.
Kerkorian sold MGM/UA to mogul Ted Turner in 1986 for $1.5 billion, then quickly bought assets back — except for the pre-1986 film library, which stayed with Turner (and many classic films like The Wizard of Oz, Singin' in the Rain and 2001: A Space Odyssey are now in the WarnerMedia collection). Kerkorian next sold assets in 1990 to Italian mogul Giancarlo Parretti's Pathe Communications for $1.3 billion. Later, Kerkorian led another group to buy the studio in 1996 from French bank Credit Lyonnais, then sold in 2005 to a Sony Corp.-led consortium for a reported $5 billion. MGM filed for bankruptcy in November 2010 before emerging a month later under new management led by Spyglass founders Barber and Roger Birnbaum.
Over the past decade, MGM's film hits have included the billion-dollar grossers The Hobbit and Bond entry Spectre in 2012, a blockbuster revival of the Rocky franchise with 2015's Creed ($173 million globally) and 2019's animated reboot of The Addams Family ($203 million).
Last July, MGM restructured its Orion Pictures — a label purchased in 1997 for its film library that included Oscar winner Dances With Wolves and actioner Robocop — to prioritize telling underrepresented stories, with Just Mercy producer Alana Mayo named as president. In October, the studio relaunched American International Pictures as a banner for deals of indie foreign sales titles.
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