LOS ANGELES -- In the ultimate symbol of one Hollywood era ending and another beginning, Metro-Goldwyn-Mayer, home to James Bond, "Thelma & Louise" and Rocky, finally found a buyer willing to pay retail: Amazon.
The e-commerce giant said Wednesday that it would acquire the 97-year-old film and television studio for $8.45 billion -- or about 40% more than other prospective buyers, including Apple and Comcast, thought MGM was worth.
The studio, which had been shopped around for months, was once home to "more stars than the heavens," as Louis B. Mayer liked to brag. But its vast production lot and pre-1986 film library were sold off decades ago. (Sony Pictures now occupies the lot, and Warner Bros. owns classic MGM films like "Singin' in the Rain," "The Wizard of Oz," and "Gone With the Wind.")
MGM does come with one Hollywood crown jewel: James Bond. The spy franchise, which started in 1963 with "Dr. No," will help Amazon compete in the white-hot streaming wars. With Disney+ coming on strong and HBO Max, Apple TV+ and Paramount+ determined to make inroads, the original streaming disrupters -- Netflix and Amazon Prime Video -- are leaning harder on movies with broad appeal to keep growing, particularly overseas.
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Amazon has $71 billion in cash and a market capitalization of $1.64 trillion, so the purchase won't drain company resources.
But Jeff Bezos, Amazon's founder and chief executive, is known as a conservative buyer. The purchase of Whole Foods for $13.4 billion in 2017 was the biggest acquisition in Amazon's history. Its next-largest deals -- until MGM -- were for Zappos ($1.2 billion, 2009) and the smart doorbell company Ring ($1.2 billion, 2018).
The Whole Foods deal was a major strategic change for the company, pushing it into new markets of groceries and stores, which it had largely avoided. MGM is more about augmenting a current strategy: Amazon most likely paid more than others thought MGM was worth because of its all-important Prime membership program.
"If you're Amazon, the perspective is what's the potential for Prime membership, what is the potential for advertising," said Brian Yarbrough, a senior analyst at Edward Jones.
In addition to paying Amazon $119 a year or $13 a month for free shipping and other perks -- notably access to the Prime Video streaming service -- households with Prime memberships typically spend $3,000 a year on Amazon. That is more than twice what households without the membership spend, according to Morgan Stanley. About 200 million people pay for Prime memberships.
"As Prime Video turns 10, over 175 million Prime members have streamed shows and movies in the past year, and streaming hours are up more than 70% year over year," Bezos said last month when Amazon reported quarterly earnings.
In buying MGM, Amazon is bolstering Prime Video at a time when the biggest old-line studios are becoming less willing to license their libraries to outside streaming services; Warner Bros., Walt Disney Studios and Paramount Pictures must now supply corporate siblings like HBO Max, Disney+ and Paramount+.
Although its library is diminished, MGM still owns 4,000 older movies, including pre-1986 films that come from two MGM divisions, United Artists and Orion. Those movies include "Rocky," "RoboCop," "The Pink Panther," "Silence of the Lambs" and the James Bond catalog. Other titles include "Legally Blonde," "Moonstruck," "Basic Instinct," "The Thomas Crown Affair" and "Tomb Raider."
MGM has several movies in its pipeline that could be Oscar contenders, including "Respect," an Aretha Franklin biopic starring Jennifer Hudson; Ridley Scott's "House of Gucci," starring Lady Gaga and Adam Driver; and Paul Thomas Anderson's latest project, which stars Bradley Cooper in his first film since "A Star is Born."
Completion of the deal is subject to regulatory approval. On Wednesday, Rep. Ken Buck, R-Colo., a senior member of the House antitrust subcommittee, said in a statement that he was "deeply concerned" by the acquisition and noted Amazon's pandemic-fueled growth spurt.
"It's critical that mergers and acquisitions involving monopoly companies experiencing tremendous and exponential growth are met with a greater level of scrutiny," Buck said. Amazon's revenue for the first quarter of 2021 increased by 44% to $108.5 billion, the company's fastest rise in almost 10 years.
MGM also has a 17,000-episode television library and a TV studio that makes "Vikings," "The Handmaid's Tale," "Fargo" and various "Real Housewives" shows. In 2014, MGM acquired Mark Burnett's production company, One Three Media, which holds rights to competition series like "The Voice." Burnett, a contentious figure in Hollywood because he helped shape Donald Trump's image with "The Apprentice" and remained close to him during his divisive presidential term, serves as MGM's television chairman.
Anchorage Capital, a New York investment firm, has been the majority owner of MGM for more than a decade. Before that, MGM was tossed between owners and, bitten by falling DVD revenue, eventually ending up in bankruptcy. It was worth about $2 billion in 2010, according to analysts.