MGM Holdings, Inc. is the holding company for the television and film studios that brought the world such classics as Singin’ In The Rain and Gone With The Wind. The entertainment colossus known for its roaring lion logo might soon become a part of the Amazon empire.
MGM (Metro Goldwyn Mayer) is a nearly 100-year-old company that has seen and brought about many of the key changes in how we consume entertainment. Marcus Loew led the formation of MGM in 1924 through a merger between Metro Pictures Corp., Goldwyn Pictures, and Louis B. Mayer Productions.
MGM Holdings Inc. is privately held and traded, which means that there are shareholders of company stock, but there aren't any shares available to the public. A privately traded company doesn't need to undergo an IPO or issue shares on a publicly traded stock exchange.
MGM’s bankruptcy filing and leadership changes
Anchorage Capital Group and other major hedge funds bought MGM’s debt before its bankruptcy in 2010, which made these funds shareholders in the newly designed entertainment company.
In 2018, the company was shaken when CEO Gary Barber was fired. It has been governed by the “office of the CEO” led by board chairman Kevin Ulrich.
Is Amazon buying MGM?
In December 2020, The Wall Street Journal reported that MGM Holdings Inc. was exploring the possibility of a sale. The largest MGM shareholder at that time, Anchorage Capital Group, had been feeling pressure due to weak performance in recent years.
The company was in talks with Morgan Stanley and LionTree LLC during its process of preparing for a sale. On May 24, news broke that Amazon.com was the likely buyer of MGM in an agreement that could possibly be finalized as soon as this week, according to The Wall Street Journal.
MGM board members received word of the potential deal on May 23, although it’s still possible that the talks could fall apart without an agreement. MGM’s last valuation in December 2020 was $5.5 billion including debt.
The prices of MGM stock jumped from about $105 in mid-May to about $140–$150 on May 24 after news of the possible sale to Amazon emerged.
Potential benefits for Amazon if it buys MGM
Amazon is known for its massive acquisitions, including the purchase of Whole Foods in 2017 for $13.7 billion. If the MGM purchase happens, it will increase antitrust concerns about Amazon from Congress as well as the FTC and the European Union.
Acquisition of MGM’s impressive library of film and television would be a major addition to the Amazon Prime Video streaming service and could attract new subscribers.
Although some classics like Gone With the Wind and The Wizard of Oz have been sold to AT&T’s Warner Bros., remaining MGM franchises and intellectual property are still significant. If Amazon buys MGM, it will own the Rocky franchise and part of the James Bond franchise.
MGM also produces popular shows like The Handmaid’s Tale and invests in live-sports offerings and acquisitions of theatrical releases from movie studios.