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Amazon to buy film studio MGM for $8.45 billion

Amazon to buy MGM Studios for $8.45 billion
Amazon to buy MGM Studios for $8.45 billion 00:27

Amazon said Wednesday it is buying Metro-Goldwyn-Mayer in a deal valued at $8.45 billion, giving the e-commerce giant access to the famed studio's extensive library of movies and TV shows, including film franchises such as "Rocky" and "James Bond." 

The deal is Amazon's biggest purchase since acquiring grocery chain Whole Foods for $13.7 billion in 2017. It also ups the competition in the rapidly emerging video-streaming landscape, with Amazon taking on Apple, Disney, Hulu, Netflix and other companies. 

Buying MGM may give the company founded by Jeff Bezos the boost in premium content it needs to become the No.1 platform in digital streaming. With over 150 million subscribers, Amazon Prime Video ranks second only behind Netflix, which has just over 200 million subscribers. 

MGM brings almost a century's worth of classic movies and award-winning content to Prime, including acclaimed series "The Handmaid's Tale" and popular reality shows like the "Real Housewives" franchise.

The deal is the latest in the media industry that's aimed at boosting streaming services to compete against Netflix and Disney+. AT&T and Discovery announced on May 17 that they would combine media companies, creating a powerhouse that includes HGTV, CNN, Food Network and HBO.

Amazon doesn't say how many people watch its Prime Video service. But more than 200 million have access to it because they're signed up for its Prime membership, which gives them faster shipping and other perks. Besides Prime Video, Amazon also has a free streaming service called IMDb TV, where Amazon makes money by playing ads during movies and shows.

Going Hollywood

Buying MGM would give Amazon access to more films, shows and famous characters, including 007 and Rocky, as well as RoboCop and Pink Panther and others. Amazon will also get a cable channel: Epix, which MGM owns.

Known for its roaring lion logo, MGM is one of the oldest Hollywood studios, founded in 1924 when films were silent. It has a long list of classics in its library, including "Singin' in the Rain." More recent productions include reality TV staples "Shark Tank" and "The Real Housewives of Beverly Hills," as well as the upcoming Bond movie "No Time to Die" and an Aretha Franklin biopic called "Respect."

Amazon already has its own studio but has had mixed results. Two of its shows, "The Marvelous Mrs. Maisel" and "Fleabag," won best comedy series Emmys. But many of its films have failed to click with audiences at the box office. Recently, Amazon has been spending on sports and splashy shows. It will stream "Thursday Night Football" next year and is producing a "Lord of the Rings" show, which reportedly cost $450 million for its first season alone.

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The deal, which is subject to customary approvals, will make Amazon, already one of the most powerful and valuable companies in the world, even bigger. Regulators around the world are scrutinizing Amazon's business practices, specifically the way it looks at information from businesses that sell goods on its site and uses it to create its own Amazon-branded products.

A report by the House Judiciary Committee in October called for a possible breakup of Amazon and others, making it harder for them to buy other businesses and imposing new rules to safeguard competition.

Amazon, founded in 1995 as an online bookstore, has become a $1.6 trillion behemoth that does a little bit of everything. It has a delivery business network that gets orders to people in two days or sooner; sells inhalers and insulin; has a cloud-computing business that powers the apps of Netflix and McDonald's; and has plans to send more than 3,200 satellites into space to beam internet service to Earth.

Anne Marie Lee contributed to this report.

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