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Amazon to Buy MGM for $6.5 Billion Excluding Debt


Amazon.com Inc.

said it has agreed to acquire Hollywood studio MGM Holdings, a deal the e-commerce giant is betting can jump-start its Prime Video streaming platform and position it to compete with industry heavyweights including

Netflix Inc.

and

Walt Disney Co.

The purchase, which was unveiled Wednesday morning, has an equity value of $6.5 billion, people familiar with the matter said. Including debt, the value of the deal is $8.45 billion, Amazon said. It is the second-largest acquisition in the company’s history behind its $13.7 billion purchase of Whole Foods in 2017.

In MGM, Amazon will get a library of over 4,000 films, including iconic franchises such as “James Bond” and “Rocky,” and classics such as “The Silence of the Lambs,” “Raging Bull” and “12 Angry Men.” The TV catalog includes critically acclaimed shows such as “The Handmaid’s Tale,” “Fargo” and “Vikings.”

Amazon’s deal for MGM is the latest in a series of mergers that are shaking the entertainment industry as media and tech companies fight for supremacy in the streaming age.

Earlier this month,

AT&T Inc.

said it would spin off its WarnerMedia assets and merge them with

Discovery Inc.

In recent years, Walt Disney bought most of the entertainment assets of 21st Century Fox, and Viacom Inc. recombined with CBS Corp., all part of efforts to amass content and build direct-to-consumer streaming services.

Media executives have buzzed for years about the possibility of mergers with companies such as Amazon and

Apple Inc.,

but the tech giants avoided big-ticket deals as they built out their streaming platforms.

Now, the landscape is shifting. Traditional studios are keeping more content for their homegrown streaming services, such as NBCUniversal’s Peacock and WarnerMedia’s HBO Max, instead of licensing it to the likes of Amazon and Netflix. Owning MGM would help Amazon better control its destiny in the streaming wars.

Amazon is banking on not only having old movies and TV shows to offer its customers but also using that content to create new franchises.

“The real financial value behind this deal is the treasure trove of [intellectual property] in the deep catalog that we plan to reimagine and develop together with MGM’s talented team,” said

Mike Hopkins,

senior vice president of Prime Video and Amazon Studios.

With the deal, Amazon will get the Rocky franchise among others.



Photo:

MGM/Everett Collection

Although Amazon has deeper pockets than any other players in the streaming game, its Prime Video service hasn’t had the creative successes that Netflix and newcomer Disney+ have enjoyed. It made several critically acclaimed movies and TV shows including “Transparent,” “Manchester by the Sea” and, more recently, “One Night in Miami.”

Prime Video is offered as a bonus for Amazon’s more than 150 million subscribers to its Amazon Prime shopping service.

Amazon and MGM held on-again-off-again talks for much of this year. The two companies first discussed a sale in January, but then discussions cooled, a person familiar with the matter said. In recent weeks, Amazon and MGM began meeting again and negotiations advanced rapidly.

Besides MGM, Amazon also approached

Sony Group Corp.’s

Sony Pictures Entertainment about an acquisition but was rebuffed, a person familiar with the matter said.

Entertainment isn’t the only content on which Amazon is spending heavily. In March it struck a deal with the National Football League for exclusive rights to Thursday Night Football at a price of $1.2 billion a season over 11 years, people with knowledge of that transaction said.

Write to Joe Flint at joe.flint@wsj.com and Dave Sebastian at dave.sebastian@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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