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Amazon in Talks to Buy MGM

By Danny Vena - May 18, 2021 at 6:30AM

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The deal would add plenty of heft to the company's streaming library, adding thousands of movies and television shows to its vault.

Amazon (AMZN -1.35%) is in talks to acquire MGM, according to various media reports. The movie studio has produced or distributed a library of popular franchises, including James Bond, Shark Tank, Vikings, The Handmaid's Tale, Rocky, and many others. MGM also owns premium cable channel Epix, as well as a stake in Mark Burnett's Survivor series. 

MGM's vast treasure trove of content, estimated at more than 4,000 film titles and 17,000 television episodes, would mark a major coup for Amazon, immediately buttressing the company's production capabilities and beefing up the streaming offerings for Amazon's Prime Video and IMDB Channel.

A couple sitting on couch eating popcorn and watching TV on their laptop.

Image source: Getty Images.

The deal is reportedly worth between $7 billion and $10 billion, though price may have been a sticking point in the discussions. Talk of a deal comes in the wake of AT&T's (T 0.58%) decision to spin off WarnerMedia and HBO to Discovery (DISCA) (DISCK).

Amazon is rumored to have lured back former executive Jeff Blackburn to head up its newly established global media and entertainment group. Blackburn left the company for a sabbatical before ultimately stepping down to join a venture capital firm. Blackburn headed up Amazon's digital content and advertising businesses, so this would be right up his alley.  

MGM is currently owned by a group of private equity firms and reportedly put itself up for sale late last year. Hedge fund Anchorage Capital Group has the largest stake, with additional backing by Highland Capital Management and Solus Alternative Asset Management. At the time, the sellers were valuing the company at roughly $5.5 billion, though no deal was consummated. 

The studio has been on the auction block numerous times in recent years. MGM sacked its then-CEO Gary Barber for having early discussions to sell the studio to Apple (NASDAQ: AAPL) back in 2018, on the eve of the launch of Apple TV+. The sales price under discussion at the time was said to be $6 billion.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Amazon and Apple. The Motley Fool owns shares of and recommends Amazon and Apple. The Motley Fool recommends Discovery (C shares) and recommends the following options: long January 2022 $1,920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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