Did Amazon overpay? What’s the destiny of MGM movie chief Michael De Luca? How a lot will MGM TV chief Mark Burnett pocket within the sale? (The reply: sufficient to carry his complete haul from a number of gross sales of his manufacturing banner to just about $1 billion.)
However the forward-looking query is how Amazon could change as soon as MGM is introduced into Jeff Bezos’ huge tent of e-commerce, web-hosting companies and media.
As the small print of the MGM deal emerged, so too did hypothesis about Amazon’s long-term plans. Sources near the scenario say there have even been discussions about Amazon ultimately spinning off the Prime Video and Amazon Studios items right into a stand-alone entity; nonetheless, Amazon sources dispute this.
Jeff Blackburn’s return to Amazon earlier this month has been interpreted as an indication of motion to return for the unit. Blackburn, the Amazon veteran credited with serving to to construct the corporate, was on sabbatical for many of 2020 after which give up in February. However on Might 13, two weeks earlier than the MGM acquisition was unveiled, Amazon stunned the enterprise world by asserting that Blackburn was again to function senior VP of the newly created International Media and Leisure unit.
Amazon is already within the midst of a administration transition, as Bezos is handing the CEO reins to Andy Jassy, the longtime head of the extremely worthwhile Amazon Internet Providers division, as of July 5.
Trade sources say Amazon’s high brass are more and more watchful of the regulatory atmosphere within the U.S. and Europe. There are issues throughout the Huge Tech companies that Amazon, Apple, Google and Fb are seen as prime targets for breakup efforts, in a lot the identical manner Microsoft battled all through the Nineties and early 2000s. The International Media and Leisure unit can also be house to Audible, Twitch, Amazon Music and Amazon Video games.
Negotiations on the deal, which incorporates about $2 billion in MGM debt, got here collectively quietly over the previous 9 months or so. Insiders say the majority of the discussions have been held one-on-one through phone and videoconference calls between Mike Hopkins, Amazon’s senior VP of Prime Video and Studios, and Kevin Ulrich, CEO of Anchorage Capital Group, the funding fund that has been the bulk proprietor of MGM.
The talks have been solely centered on the worth tag for the sale. Selections in regards to the destiny of MGM senior executives and the way the studio itself will function inside the Amazon Studios infrastructure weren’t addressed. That led to quick post-announcement jockeying amongst key gamers together with De Luca, Burnett and Amazon Studios head Jennifer Salke, who now oversees an authentic content material finances pegged at almost $8 billion. Amazon insiders say there is no such thing as a situation into account that may result in main adjustments for Salke.
The one certainty at this stage is that Burnett is poised to emerge from the sale with a windfall estimated at round $200 million. He and his spouse and enterprise accomplice, Roma Downey, have been the third-largest shareholders in MGM behind Ulrich’s Anchorage and Highland Capital Administration. The 2 bought their One Three Media manufacturing banner (a three way partnership with Hearst) to MGM in two transactions in 2014 and 2015, valuing the corporate at $650 million. In 2015, the pair took greater than half of their second payout in MGM inventory relatively than money. That proved to be a great guess with the $8.5 billion sale.
Ulrich famously fired former MGM chairman Gary Barber in 2018 after he sought to orchestrate the sale of the studio to Apple for $6 billion. On the time, Ulrich was the topic of business snickers that he didn’t wish to quit his entrée to crimson carpets, schmoozing with A-listers and different trappings of Hollywood moguldom.
Sources who’ve labored with the hedge fund government say he has all the time saved his concentrate on exiting MGM — on the proper time and the best value. Ulrich’s religion in MGM’s attractiveness to patrons because the streaming wars started to rage was demonstrated by all the issues MGM didn’t do prior to now two years.
MGM opted to not open up its vault for content material licensing or reboots. It didn’t raid its library to develop properties tied to characters on such well-known titles as “Rocky,” “The Pink Panther,” “Legally Blonde,” “4 Weddings and a Funeral,” “RoboCop” and “The Graduate.”
MGM’s earnings might have simply been padded by content material offers for marquee titles. However that may have locked up these property even within the brief time period with motion pictures and TV sequence obligated to rival platforms. A part of MGM’s enchantment to Amazon was that a lot of its library has but to be mined for recent content material choices. Certainly, one supply near the scenario says the one greatest asset that Amazon positive aspects within the deal just isn’t the library per se however the keys to a vault of IP that has potential properly past MGM’s current roster of 4,000 motion pictures and 17,000 TV episodes.
The James Bond franchise, after all, is the enormous exception, as it’s collectively owned with Eon Prods.’ Barbara Broccoli and Michael G. Wilson, who keep veto energy over any use of agent 007.
Even with out the famend spy, the wealth of fabric that Amazon is getting for its $8.5 billion will set the corporate clearly other than Netflix and Apple within the race to construct world streaming media platforms.
“The one manner you assume Amazon overpaid for this deal is in case you have completely no creativeness,” says a senior government concerned with the deal.