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Amazon Unveils Blockbuster Deal with $8.45B Purchase of MGM

A stack of Amazon packages on a front porch.

Los Angeles CA, November 11/22/2017: Image of an Amazon packages. Amazon is an online company and is the largest retailer in the world. Cardboard package delivery at front door during the holiday season. shipping package parcel box on wooden floor with protection paper inside. Amazon.com went online in 1995 and is now the largest online retailer in the world.

On Wednesday, Amazon.com Inc. and Metro-Goldwyn-Mayer Studios Inc. (MGM) announced a merger agreement. The e-commerce titan will acquire the entertainment company, and with it, one of the world’s richest collections of premium film and television content. According to the parties, Amazon will preserve MGM’s legacy and library of films, and provide customers with increased access to these existing works.

According to a Wednesday article published by The New York Times, Amazon paid about 40% more for MGM than other potential buyers, like Apple and Comcast, thought it was worth. In their coverage of the deal, The New York Times reported that Amazon likely paid such a premium because, aside from the fact that it could, of its keystone Prime membership program.

By purchasing MGM, The New York Times explained, “Amazon is bolstering Prime Video at a time when the biggest old-line studios are becoming less willing to license their libraries to outside streaming services; Warner Bros., Walt Disney Studios and Paramount Pictures must now supply corporate siblings like HBO Max, Disney+ and Paramount+.”

That shift, the article stated, has enhanced the value of independent film libraries. By way of example, The New York Times pointed to deals recently reached between Sony Pictures and Netflix and Disney. Sony reportedly licensed its old films and TV shows to the streaming platforms in deals valued at over $3 billion, a marked increase from the parties’ expiring agreements.

The news outlet noted, however, that the deal must first receive regulatory approval, which may be hard won. Reportedly, at least one legislator, Rep. Ken Buck (R-Colo.), also a senior member of the House antitrust subcommittee, expressed concern over the merger, partly in light of Amazon’s pandemic-driven surge.

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