How much is an iconic film and TV library that includes James Bond, Rocky and Creed, The Silence of the Lambs, Thelma and Louise, Survivor and The Handmaid’s Tale really worth?
According to Amazon, those 4,000 film titles and 17,000 TV episodes are worth about $3.4 billion.
That is what the tech giant values MGM’s library of films and TV shows at, according to a footnote in the company’s quarterly report, which was filed with the SEC Friday morning.
The 10-Q is actually the first securities filing to discuss Amazon’s purchase of MGM in any detail, as it declined to do so earlier, saying that the buy of the storied studio was “not material” to its business.
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In fact, the filing reveals a few new details about the purchase, which was first announced last May and closed in March.
While Amazon cited MGM’s enormous library of content to justify the $8.5 billion deal, most of the company’s value is in $4.9 billion worth of “goodwill,” according to the filing. Goodwill is a catchall finance term for intangible assets acquired as part of a purchase. In this case, it is safe to assume that MGM’s robust intellectual property holdings, as well as its 100 year old brand name, and its existing relationships with creative talent, are responsible for that valuation.
And the filing disclosed new details on the structure of the deal, details of which were missing when it was first announced a year ago. Amazon paid $6.1 billion in cash for MGM, and also assumed $2.5 billion in debt, which it repaid after the acquisition closed.
The company also warns that its estimates for the value of MGM’s library and IP could be adjusted in the future: “Due to the limited amount of time since the MGM acquisition, the valuation of certain assets and liabilities is preliminary and subject to change.”
In fact, Amazon’s ownership of MGM is already beginning to be felt. While the long-term strategy remains full of unanswered questions, this week Michael De Luca, the chairman of MGM’s motion picture group, and his top deputy, MGM motion picture group president Pam Abdy, announced that they would be departing the company.
Amazon touted the purchase in is otherwise-disappointing earnings report Thursday, saying that it will “create even more opportunities to deliver quality storytelling to customers.”
