Amazon (AMZN) - Get Report said Wednesday that it has reached an agreement to to buy MGM Studios for around $8.5 billion, a move that adds a host of legacy films to the online retailer's content as it continues to challenge Netflix (NFLX) - Get Report and Disney (DIS) - Get Report.
Amazon will pay $8.45 billion for MGM and its 4,000-strong catalogue of films, including the James Bond franchise, and 17,000 television shows. The deal, the biggest since its purchase of Whole Foods for $13.45 billion in 2017, will be subject to regulatory approval and comes amid a major shift in the streaming wars following last week's $43 billion media asset merger between AT&T T and Discovery DICSA and billions in production and content investment commitments from Disney, Netflix and Apple (AAPL) - Get Report.
“MGM has a vast catalog with more than 4,000 films—12 Angry Men, Basic Instinct, Creed, James Bond, Legally Blonde, Moonstruck, Poltergeist, Raging Bull, Robocop, Rocky, Silence of the Lambs, Stargate, Thelma & Louise, Tomb Raider, The Magnificent Seven, The Pink Panther, The Thomas Crown Affair, and many other icons—as well as 17,000 TV shows—including Fargo, The Handmaid’s Tale, and Vikings—that have collectively won more than 180 Academy Awards and 100 Emmys,” said Amazon Studios' senior vice president Mike Hopkins.
“The real financial value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team. It’s very exciting and provides so many opportunities for high-quality storytelling,” he added.
Amazon shares were marked 0.5% higher in pre-market trading immediately following confirmation of the deal to indicate an opening bell price of $3,275.00 each.
TheStreet's founder, Jim Cramer, said that entertainment has been a "weak spot" for Amazon, and that this deal was a "brilliant move" for the online retail giant. "Now, watch what they do in sports," he told CNBC's Squawk Box program.
"What did they do with their NFL (broadcasting rights)? Did they publicize, did they lever Alexa or Draft Kings (DKNG) - Get Report?", Cramer said. "I felt that their whole sports slate is embarrassing. They need to do something in sports ... I'm just not used to Amazon not being number one."
Discovery CEO David Zaslav told investors that the combined media group created by last week's merger would spend $20 billion a year on new content while holding on to its CNN network and "leaning in" to news coverage.
Netflix said last month that it expects to add around 1 million new subscribers to its streaming service -- the largest in the world -- this quarter, a figure came in well shy of Street forecasts of around 4.8 million. The estimate followed a weaker-than-expected March quarter tally of 3.98 million, which also missed analysts' estimates of a 6.25 million total.
Disney, for its part, posted a 13% decline in group revenues, to $15.61 billion, and an overall subscriber total for its Disney+ streaming services of 94.9 million, both of which fell shy of analysts' estimates.