Sat. Dec 4th, 2021

Amazon.com Inc.

AMZN 1.31%

is nearing a deal to buy the Hollywood studio MGM Holdings for almost $9 billion including debt, said people familiar with the matter, a pact that would turn a film operation founded in the silent era into a streaming asset for the e-commerce giant.

An agreement could be announced as early as this week, people close to the situation said, assuming the talks don’t fall apart at the last minute.

The deal would mark Amazon’s second-largest acquisition in history, behind its $13.7 billion deal for Whole Foods in 2017, and highlight the premium that content is commanding as streaming wars force consolidation and drive bigger players to bulk up with assets that help them compete.

The privately traded MGM was valued around $5.5 billion, including debt, last December. Its stock price has soared in recent days, from about $105 a share in mid-May, before talks were reported, to roughly $140 a share Monday morning.

The fabled movie and TV studio has long been considered in play, but hired investment banks LionTree LLC and

Morgan Stanley

late last year to begin a formal process.

News of the advanced negotiations comes just a week after

AT&T Inc.

agreed to combine its media assets with

Discovery Inc.

and form a new company, a deal that is expected to spark even further consolidation in the media space.

MGM has a TV studio whose shows include the Hulu hit ‘The Handmaid’s Tale.’



Photo:

George Kraychyk/Associated Press

The talks between Amazon and MGM have been on-again, off-again since the start of this year, people close to both companies said. Amazon and MGM have been in exclusive talks in recent weeks, the people said. The MGM board was briefed on the matter Sunday night, a person close to the situation said. There are no guarantees they will ultimately reach an agreement.

An acquisition of one the most iconic entertainment brands in the world would be the most aggressive foray yet by a tech giant into Hollywood.

The studio is best known for classics like “Singin’ in the Rain,” as well as “Rocky” and “The Pink Panther.” MGM has a library of titles, including the James Bond franchise, that, in contemporary Hollywood, is most valuable as an asset that can be used to drive subscriber sign-ups to Amazon’s Prime Video streaming service.

MGM also has a TV studio whose shows include the Hulu hit “The Handmaid’s Tale” and FX’s “Fargo.” It also owns the premium pay-TV channel Epix.

MGM shares the James Bond franchise with a holding company owned by the Wilson/Broccoli family, who co-own the copyright to existing Bond movies and control the future of the franchise. The next James Bond movie, “No Time to Die,” was repeatedly delayed due to Covid-19 and is now scheduled for release in October.

MGM is best known for classics like ‘Singin’ in the Rain.’



Photo:

DPA/Zuma Press

Forbes and The Information previously reported on Amazon’s interest in MGM.

Amazon has continued to invest billions of dollars in its film and TV operations as well as live sports to support the company’s Prime membership offering. The company is currently in production on a TV series based on “Lord of the Rings,” which has a first-season budget of $465 million.

Amazon has spent hundreds of millions of dollars acquiring would-be theatrical releases from major studios, like Paramount Pictures’ forthcoming “The Tomorrow War” starring

Chris Pratt.

It also aggressively pursued a deal to stream movies from Sony Pictures Entertainment on its service, a person familiar with that situation said. Sony Pictures ultimately ended up reaching a multiyear agreement with

Netflix Inc.

It is also continuing to invest heavily in live sports. In March, Amazon struck a long-term deal to stream the NFL’s Thursday night franchise at an average annual fee of $1.2 billion.

The MGM deal would mark the latest twist in what has been a rocky journey for the studio. In 2018, it fired then-chief executive

Gary Barber

for having preliminary conversations with

Apple Inc.

for a sale that valued the studio at more than $6 billion. Since then, MGM has had no chief executive officer, instead having an “office of the CEO” comprised of executives across the company. Its board is chaired by hedge-fund manager

Kevin Ulrich,

co-founder of New York hedge fund Anchorage Capital Group, MGM’s largest shareholder.

Write to Juliet Chung at [email protected], Joe Flint at [email protected] and Erich Schwartzel at [email protected]

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By rahul