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In December, MGM Holdings unveiled a deal with Amazon Web Services. The independent studio was looking for technology “to predict content viewing and sales trends so they can forecast demand for their vast content library,” Amazon announced at the time. Doug Russo, MGM’s CTO, said it would use AWS tech to “grow new revenue opportunities” as it moved its content to the cloud.
Apparently those MGM-AWS talks struck a chord.
That same month, the studio enlisted Morgan Stanley and LionTree to advise it on a sale. Now, just a few months later, the technology giant has an agreement to buy the home of James Bond, the Rocky franchise, Survivor and The Handmaid’s Tale in a deal that values the studio at $8.45 billion.
The blockbuster acquisition, assuming it passes regulatory muster, raises questions about the studio’s film and TV commitments.
On the theatrical front, it’s unlikely that MGM and United Artists Releasing would change plans for their remaining 2021 theatrical releases — including the James Bond pic No Time to Die — particularly since the deal is likely to take months to close. UAR is a subsidiary of MGM and handles domestic distribution duties for MGM titles (Universal has international on No Time to Die).
The slate includes an Aretha Franklin biopic starring Jennifer Hudson (Aug. 13); The Addams Family 2 (Oct. 1); No Time to Die (Oct. 8); Ridley Scott’s House of Gucci, starring Lady Gaga and Adam Driver (Nov. 24); Joe Wright’s Cyrano (Dec. 24); and an untitled Paul Thomas Anderson feature that expands nationwide Dec. 26.
Still, the announcement left many key questions unanswered regarding the future of how MGM movies will be released once Amazon officially owns the storied studio. Unlike rival Netflix, Amazon Studios has been supportive of theaters, including giving many of its original movies an exclusive release in cinemas before they launch on Prime.
The Bond franchise has always been a marquee theatrical franchise that’s well known around the globe. And Bond producers Barbara Broccoli and Michael Wilson, whose U.K. production company EON is 007’s home, are especially keen on the big-screen experience. (EON and MGM share rights via a holding company.)
Also unclear for now is what Amazon will do with the premium cable network and streaming service Epix (would it be integrated into Amazon Prime Video?) and if it will continue to function as a third-party supplier to competitors with shows like The Handmaid’s Tale at rival Hulu, Vikings at Netflix or an upcoming Vanderpump Rules spinoff at Peacock.
Meanwhile, MGM’s television division, overseen by MGM Worldwide TV Group chairman Mark Burnett, has been fraught by internal turmoil after the reality super-producer was promoted to the role in mid-2018.
Sources told THR in November that Burnett tended to meddle in areas in which he had no defined role and would frequently badger and criticize staffers and fellow executives. The culture led to high-level exits, threatened departures and at least one HR complaint. In March, MGM TV/United Artists president Steve Stark blindsided staff with his abrupt decision to step down following a decade-long run during which he developed hits including The Handmaid’s Tale, FX’s Fargo and, more recently, CBS-turned-Paramount+ entry Clarice.
Stark’s exit for a producing deal came after sources noted Burnett is said to have ruffled feathers by involving himself in Stark’s prestige scripted television division. MGM at the time insisted that Stark continued to report to Burnett, though multiple sources said Stark was assured that he could operate without interference. Epix president Michael Wright — who launched originals including Godfather of Harlem and Pennyworth — was promoted to a dual role reporting to the MGM board and Burnett.
As the finishing touches on the Amazon-MGM deal were being negotiated May 24, Burnett posted a video to his Instagram of a helicopter dropping him on the side of a remote mountain in Iceland, before flying away. “Nothing like being dropped off and as the rotor blades fade away, you hear only the wind,” Burnett wrote.
With the acquisition, Amazon also secures a wealth of IP for the small screen and a film library. That would appear to include Burnett’s long-sought-after tapes from Donald Trump’s era on The Apprentice.
A theme that underpins the deal is the question of whether Amazon is buying MGM solely for its film and TV library or whether it wants to continue to invest and grow the studio.
“The real financial value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team. It’s very exciting and provides so many opportunities for high-quality storytelling,” said Mike Hopkins, senior vp of Prime Video and Amazon Studios, in a statement.
In its official announcement, Amazon noted it would “help preserve MGM’s heritage and catalog of films and provide customers with greater access to these existing works. Through this acquisition, Amazon would empower MGM to continue to do what they do best: great storytelling.”
With Amazon Studios chief Jennifer Salke coming from the broadcast arena at NBC, it also remains to be seen how a combined TV division could be staffed after Burnett continued to seek additional power and a bigger purview at MGM TV.
The closest comparison may be the tech giant’s 2017 acquisition of Whole Foods. At $14 billion, it was the last Amazon deal to rival the MGM acquisition in scale. Ultimately, the Whole Foods brand continued on unchanged, albeit with some Amazon integrations into its stores and with some Whole Foods integration into Amazon’s apps.
Amazon is even building new Amazon Fresh supermarkets that effectively compete with Whole Foods, setting a precedent that could apply to a future with Amazon Studios and MGM living side-by-side. Indeed, in its deal announcement, Amazon said that MGM “complements the work of Amazon Studios, which has primarily focused on producing TV show programming,” suggesting that both studios will co-exist.
The mood at MGM’s film studio wasn’t entirely one of doom and gloom on Tuesday, with some even saying they feel optimistic. Amazon Studios’ film efforts could be significantly boosted by the MGM team (whom Hopkins went out of his way to mentioning in the press release announcing the deal).
Insiders say Hopkins, Amazon Studios head Jennifer Salke and Amazon Studios COO Albert Cheng were among the Amazon execs who hosted a virtual meeting with MGM brass, including film group chief Michael De Luca, who has made MGM a more competitive player since he took the top job in January 2020.
Assuming regulators sign off on the acquisition, integrating MGM into Amazon will fall under the oversight of two top executives: Jeff Blackburn, who recently rejoined Amazon to lead its media and entertainment businesses, and Andy Jassy, the CEO of AWS, who will succeed Jeff Bezos as Amazon’s CEO this year.
Blackburn was an original Amazon hire and is a trusted protege of Bezos, who left the company this year to join a venture capital firm. This month, however, Jassy told employees that Blackburn would return to oversee Amazon’s content businesses, which include Amazon Studios, Prime Video, Audible and Twitch.
As for Jassy: Just a few days after Amazon and MGM unveiled their technical partnership in December, he took the stage at the annual summit hosted by AWS. In a virtual keynote address, he said the theme for the conference was “reinvention.”
Citing the example of Netflix de-emphasizing its DVD-by-mail service to focus on streaming, Jassy stressed that it is incumbent on companies to recognize when their business models no longer work. It’s a message that may well have applied to MGM, facing an onslaught of competition from technology and entertainment giants with larger platforms, better technology and significantly larger budgets.
“Sometimes, it is acknowledging that you can’t fight gravity,” Jassy said. “If something is going to happen, it is going to happen regardless of whether you want it to or not.”
Lesley Goldberg and Pamela McClintock contributed to this report.
Updated 3 PM with reaction rom within MGM
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