Bezos Meets Bond: Amazon to Acquire MGM

Bezos Meets Bond: Amazon to Acquire MGM​

The Story

Amazon is set to acquire MGM, the Hollywood studio behind the James Bond franchise (Financial Times). The $8.45 billion price tag makes it the second largest deal in Amazon’s history, right behind its $13.7 billion acquisition of Whole Foods in 2017 (Financial Times). The e-commerce giant will gain access to a rich catalogue of over 4,000 films and franchises, and over 17,000 episodes of TV programming (LA Times). It will also benefit from MGM’s invaluable intellectual property, talent, and expertise (Observer).

The acquisition is aligned with Amazon’s expansive strategy. Amazon Prime is a package deal – the subscription offers a variety of perks, including access to Prime Video. The idea behind the Amazon-MGM deal is that an attractive film and TV catalogue on Prime Video will draw consumers in, and eventually make them more likely “to stick around and order a pair of shoes” (Vox).


What It Means For Businesses And Law Firms

The rise of streaming services has prompted “a flurry of media consolidation” (TechCrunch). In order to compete with the likes of Netflix and Disney+, more and more companies are looking to launch their own streaming services. However, organic growth is not always the best bet in the fast-paced world of streaming - especially given the time, effort, and costs associated with creating original content from scratch. As such, acquisitions appear to be a more efficient tool, with companies scrambling to get their hands on “content, networks or studios” (CNN). The acquisition of MGM will certainly bolster the range of titles available on Prime Video, as well as the production capabilities of Amazon’s existing studio arm.

Law firms with blockbuster Merger and Acquisitions practices will likely reap the benefits of this trend in the media sector. Cravath, Swaine & Moore is acting for Amazon, while Paul, Weiss, Rifkind, Wharton & Garrison, and Latham & Watkins are acting for MGM Studios (Bloomberg Law).

Designated teams within the firms’ respective corporate practices are likely coordinating the deal. Their tasks may include: conducting due diligence so as to uncover any points of contention, and negotiating and drafting the terms of acquisition on behalf of the parties.

The Amazon-MGM deal has not closed yet – it remains subject to regulatory approvals (NPR). Since Amazon has had a number of run-ins with regulators due to its business practices, the law firms’ antitrust expertise will likely be engaged. However, Amazon’s presence in the film and TV sphere is arguably not established enough to render the acquisition anticompetitive (Vox). It remains to be seen whether such an argument will be accepted by regulators.

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