Amazon announced Wednesday it is acquiring iconic film studio Metro-Goldwyn-Mayer for $8.45 billion, a move that the e-commerce giant hopes will expand its position in streaming video and increase the value of its Prime rewards program. Amazon stock edged up.
The deal will allow Amazon to add MGM's catalog of more than 4,000 films and 17,000 hours of TV content to its streaming video services. MGM still produces the James Bond film franchise, and owns the "Rocky" series of films.
Amazon stock inched up 0.3%, near 3,268.50, during morning trading on the stock market today.
The acquisition is Amazon's largest since buying Whole Foods for $13.7 billion in 2017.
"The real financial value behind this deal is the treasure trove of IP (intellectual property) in the deep catalog that we plan to re-imagine and develop together with MGM's talented team," said Mike Hopkins, senior vice president of Prime Video and Amazon Studios, in written remarks with the announcement. "It's very exciting and provides so many opportunities for high-quality storytelling."
Amazon Stock Bolstered By Prime
Analysts attribute a multiyear rise in Amazon stock, in part, to Amazon Prime. Users pay an annual or monthly fee for the service and receive multiple perks, such as free access to Amazon Video and Amazon Music. Amazon has invested billions of dollars in its film and TV operations as well as live sports.
"We view the deal positively for Amazon, as it furthers their efforts to add new content to the Amazon Prime Video offering," Cowen analyst John Blackledge said in a note to clients.
For more than eight months, however, Amazon stock has trended sideways.
Reports of a deal emerged last week, the same day AT&T and Discovery announced they plan to merge their media assets. That union comes at a time when streaming video wars have escalated among multiple rivals.