Amazon buying MGM for $8.45 bln, will ‘reimagine’ storied movie, TV brands said Wednesday it is buying MGM, the US movie studio for the James Bond franchise, for $ 8.45 billion, giving it a large library of movies and TV shows, and increasing competition with rivals run by Netflix and Disney +.

MGM, or the privately held Goldwyn Mayer Metro, was founded in 1924, owns the Epix cable channel and makes popular television shows including “Fargo”, “Vikings” and “Shark Tank”.

The deal was created to help Amazon overload its Amazon Prime Video service by keeping customers engaged and paying an annual subscription that also guarantees fast delivery of purchases from its online store.

“The real financial value behind this deal is the treasure trove of intellectual property in the in-depth catalog we plan to reimagine and develop together with MGM’s talented team. said Mike Hopkins, senior vice president of Prime Video and Amazon Studios.

Amazon Video Prime faces a long list of competitors including Netflix Inc., Walt Disney Co. Disney +, HBO Max and Apple TV + Apple TV +. Companies are increasing costs and expanding into international markets, aiming to catch the pandemic-led change in over-the-counter online shows.

Amazon has also made big bets on seeking out direct sports fans and obtained lucrative licenses to broadcast games, including a long-term deal with the National Football League that was estimated to cost about $ 1 billion a year.

Broadcasting services are also being mixed for brands that they can expand and libraries of old shows and movies. Analysts have said that this is a big motive for another round of consolidation of media properties after a short break during the pandemic.

Highlighting the trend, AT&T Inc. announced a $ 43 billion deal last week to start its WarnerMedia business and combine it with Discovery Inc., one of the most ambitious yet in the broadcast era.

“Amazon is looking to become a more prominent player in the entertainment world and there is no better way to do that than by buying one of the most iconic movie studios in Hollywood,” said Jesse Cohen, senior analyst at Investing .com. “It’s all about content as the war heats up.”

The acquisition is Amazon’s second largest after Whole Foods Market, which it bought for $ 13.7 billion in 2017.

The price represents a high price compared to other offers. The price is about 37 times the MGM 2021 EBITDA estimate – or almost triples the company’s value in the amount of EBITDA that the Discovery deal meant for AT&T content assets – according to Reuters Breakingviews.

MGM began a formal sales process in December, when it was estimated to be worth about $ 5.5 billion.

The deal can be seen as a duplication of the business strategy that Amazon CEO Jeff Bezos articulated at a conference in 2016: “When we win a Golden Globe, it helps us sell more shoes,” he said. referring to the varieties of the Amazon. business divisions.

In April, Amazon posted its fourth consecutive quarterly profit and boasted more than 200 million Prime loyalty subscribers.

Amazon shares rose 0.3% in early trading.

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