Yahoo Finance’s Alexandra Canal breaks down Amazon’s acquisition of MGM Studios.

Video Transcript

ALEXID CHRISTOFOROUS: Another day, another mega media merger. This time, Amazon is buying the Hollywood powerhouse MGM Studios for just under $8 and 1/2 billion. We've got Alexandra Canal here with all of those details. What's this going to mean, especially for the Bond franchise, right? Doesn't MGM have the Bond films?

ALEXANDRA CANAL: They do, and they have a lot more than just that. Certainly this is a big deal for the streaming wars at large. It follows that $43 billion merger we saw last week between Discovery and WarnerMedia. Amazon now set to purchase MGM in that deal valued at $8.45 billion. Now that's the second largest acquisition behind Whole Foods, which the tech giant purchased for nearly $14 billion back in 2017.

Now, rumors have swirled for years that MGM has been up for sale. They were reportedly seeking north of $10 billion, but buyers at the time really valuing the company at around $6 billion. So the fact that they were able to get almost $9 billion from Amazon is certainly good news from MGM. We heard from Tuna Amobi from CFRA just a couple of days ago on the show. He said he was still trying to wrap his mind around that nearly $9 billion valuation.

But for Amazon, it's not that bad of a deal either because MGM has one of the deepest content libraries. You mentioned the James Bond franchise. Those films have grossed over $7 billion at the global box office to date. Still more movies to come, and that's not all. MGM has over 5,200 titles, 17,000 hours of TV, 177 Oscar wins, and the list goes on and on. So certainly a great addition for Amazon as they look to tackle some of those other tech giants in this space. Of course, this largely is not super surprising. A lot of experts have said since that WarnerMedia Discovery deal, you can expect to see a lot more consolidations in this space. Some other names that have been thrown around include Comcast Peacock, along with ViacomCBS.

We did have the chance to speak with the streaming head of ViacomCBS last week, Tom Ryan. He would not comment on that Warner Discovery deal at that time, but he did say that the company was very well-positioned moving forward. But I think the issue here is that a lot of these media executives are going to have to weigh whether or not they can still be well positioned as these media giants start to merge their libraries together. Because at the end of the day, it's all going to be about content.

And I think potentially another form of consolidation you could see is some of these smaller players just have to shut their doors. If you're not able to write that $100 million check for an episode for a TV series, you're going to fall behind. We saw how much money the "Knives Out" sequels went for when Netflix purchased those for $450 million. And if you're not able to keep up with the piece of content and how much money you need to really attract more content, then you're not really going to have a solid foundation and a solid place in this streaming fight. So this ultimately, I think, is a great thing for Amazon. And it gives them the jolt that they really needed to kind of face off against the bigger guys here.

KRISTIN MYERS: Allie, it's interesting that you mention how some of those smaller production companies just might be forced to close their doors because they can't compete against those big names like Amazon. Because that's what has been-- essentially, Amazon's been critiqued about doing that to some of those regular third party sellers that are on their website that, frankly, just cannot compete with Amazon and their prices, especially when they decide to start making some of their products.

So on that point, just the-- just yesterday, the DC Attorney General essentially alleged that Amazon has monopoly power over those third party sellers in its marketplace. Curious to know what this media deal might mean for any kind of antitrust crackdown on Amazon.

ALEXANDRA CANAL: Well, certainly, you're right. Amazon has been the talk of the town, the talk of DC, Wall Street, when it comes to antitrust. But specifically with this streaming deal, I think they have the argument here that the competition is just too hot. You can reference the WarnerMedia Discovery deal. You can reference the fact that Netflix, which has really been the behemoth in this space, the one to beat, they missed out on their subscriber growth estimates last quarter because of all of this increased competition.

So Yahoo Finance went out and they spoke to a few experts in this space, some lawyers. They said it is very unlikely that this deal will get blocked due to antitrust arguments, just because of the competition and how many players are in this space. However, that being said, Amazon is always closely watched. The Biden administration has had antitrust on the brain for quite some time. So I still think that DC is going to look into this. But I ultimately don't think that this deal in particular is going to lead to anything for Amazon.

ALEXID CHRISTOFOROUS: All right, Alexandra Canal, lots of news coming out of Amazon today. Thanks for that.