COMMENTARY

Is Amazon Going Big Or Small In Its $9 Billion Deal For MGM?

• by Wayne Friedman , Staff Writer, 5 hours ago

With its announced $8.45 billion deal for MGM, one wonders whether this is just a start of Amazon's deal-making for more media assets -- or if, in addition, it might also ramp up individual new mega-deals with big-time movie and TV producers.

It seems like a drop in the bucket -- either way -- for Amazon -- especially with regard to those bigger $40 billion to $70 billion media deals that legacy media companies have done over the last few years.

MGM does have the background mechanics, especially when it comes to theatrical distribution, as well as a major film library (James Bond, “Rocky” films), and current production of TV shows, such as "The Handmaid’s Tale" and "Survivor." But links to other major TV-media distribution channels? Not so much. (It does own the Epix cable channel.)

The downside: Sans MGM, Amazon would need to build this structure in a piecemeal way. That takes time -- and perhaps some missteps along the way.

If Amazon was to make a real impact, targeting, say, ViacomCBS -- which has a movie studio, Paramount, and major distribution channels (CBS, MTV, Comedy Central and other networks) -- that would make a bigger impact.

Perhaps Amazon is just being conservative in a $9 billion purchase.

And consider the rising wars of content production for movies and TV shows. Netflix plans to spend $17 billion this year; the forthcoming Discovery-WarnerMedia says the companies, still separately operating, will spend a collective $20 billion in 2021.

Is Amazon looking to keep pace here?

What are its real plans going forward for all its video activities, including its Amazon Prime Video (subscription, no advertising, on-demand), IMDB (free, ad-supported on demand), and its set-top box/platform for streaming apps, Amazon Fire TV?

With all new digital media disruptions and innovations, one assumes there could be alternatives to the way movies and TV shows are produced and distributed.

For sure, Amazon might be moving somewhat slower in the space -- partly because its ecommerce business keeps growing sharply higher. Perhaps, as many suspect, it believes this business will continue to be its mothership.