Amazon.com Inc. won unconditional approval from the European Union for its plan to buy the Metro-Goldwyn-Mayer movie company for $8.45 billion, a bet that a nearly century-old Hollywood icon can feed an insatiable demand for streaming content.
The deal poses no competition problems in the 27-nation EU, the bloc’s commission said in an emailed statement Tuesday.
The proliferation of streaming services, including newer arrivals such as HBO Max and Disney+, has put pressure on Amazon to acquire more programming.
Amazon founder Jeff Bezos made no secret of his desire to get into movies, and MGM’s vast backlog provides an abundance of streaming material, not to mention an opportunity to mine the iconic James Bond and Rocky franchises for new films and television shows.
“This jump-starts them by 50 years,” said Michael Pachter, an analyst with Wedbush Securities. “That’s really what it comes down to. They weren’t going to be able to produce enough content to ever get close to Netflix.”
Pachter said that Amazon’s studios produce a few hundred hours worth of television shows and movies a year. MGM adds a back catalog of 25,000 hours that Amazon could divvy up between its Prime Video offering, or its free-to-stream, ad-supported IMDb TV.
“We’re pleased with the commission’s decision and, with MGM, look forward to providing more choice of quality entertainment for viewers,” Amazon said in an emailed statement.
The takeover is Amazon’s biggest acquisition since it agreed to buy Whole Foods in 2017 for $13.7 billion but follows investments of about $11 billion on content for its streaming video and music services last year alone.
Mike Hopkins, senior vice president of Prime Video and Amazon Studios, in a statement pointed to MGM’s “deep catalog” as justification for the purchase.
MGM has been seen as a takeover target for years, but was never able to close a sale before. The company made a fresh push last year when it tapped advisers to seek offers.
Previously, Amazon has acquired smaller startups it perceived as a threat — footwear seller Zappos, say, or Diapers.com parent Quidsi. Amazon also has snatched up-and-comers in new business lines, such as the game platform Twitch or Kiva, which makes warehouse robots.
It’s unusual for Bezos to spend big bucks on a legacy business like MGM. The only other example is the purchase of Whole Foods Market in 2017, which came after Amazon spent a decade trying to become a player in grocery sales — with little to show for its efforts and investment. Today, some analysts deem the Whole Foods acquisition wrong-headed and point to the fact that Amazon has since started a rival grocery chain.
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