MGM is privately traded and was valued at around $5.5 billion in December last year. The shares of MGM were trading at around $105 in May and have since soared to $150 as of Monday afternoon after the announcement of potential talks.
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Shares of Amazon are up by over 2% year-to-date and down by about 4% over the past one month, probably weighed down by the broader sell-off in the technology and growth stocks.
What MGM adds to Amazon?
MGM has a strong media content library that includes well known brands — “Rocky” and the “James Bond” franchise. It also owns a TV studio that has produced popular shows such as “The Handmaid’s Tale” and ‘Fargo”.
Amazon has its own Prime Video streaming service and MGM’s portfolio can help it add to its content library and drive subscriber growth and engagement.
The streaming wars
The streaming wars have been getting intense over the years and the media industry is seeing consolidation with the recently announced merger of AT&T Inc.’s (NYSE: T) WarnerMedia business segment and Discovery Inc. (NASDAQ: DISCA).
The streaming companies are increasingly fighting over premium content by acquiring media assets or striking exclusive deals with media houses. Netflix Inc. and Sony Pictures Entertainment entered into a multiyear agreement, which gives Netflix the domestic streaming rights to the studio’s theatrical movies.
Apple Inc. (NASDAQ: AAPL) has launched its own streaming service and is investing billions in building out original content as well as striking deals with other players.
Amazon’s second largest deal
The acquisition of MGM represents the second-largest deal ever done by Amazon, behind its $13.7 billion acquisition of Whole Foods in 2017.
The deal is expected to be announced as early as this week which would drive further consolidation and acquisition activity in the media industry.
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