The media business this year has reached levels not seen since the dotcom boom with more than $ 232 billion in reported transactions until Amazon closed for a $ 9 billion takeover of MGM, the historic film studio behind to James Bond and Rocky.
The e-commerce giant’s planned deal, which would be its biggest acquisition in the media sector, follows AT&T’s decision to merge. WarnerMedia with Discovery to create a film and TV company with an enterprise value of more than $ 130bn. The combined group hopes to compete with Disney, Netflix and Amazon in the streaming race.
The value of business announced in the media sector so far this year is the highest since 2000 and up more than 640 percent compared to the same period in 2020, according to Refinitiv data.
The M&A spree has been driven by broadcasters, entertainment companies and technology groups that want to expand content to attract subscribers to their streaming services.
Disney, Apple, WarnerMedia, Comcast and Discovery are among the companies that have launched streaming platforms in the last 18 months.
Apple and Comcast were also in competition to buy MGM, which is controlled by US hedge fund Anchorage Capital and a consortium of financial investors, according to people briefed on the talks. Amazon was in pole position to prevent because it was willing to pay $ 3 billion more than its nearest competitor, people added.
“Streaming competitors use M&A to increase scale and be better positioned to create and acquire exclusive content, which is critical to guiding subscribers,” said Marco Caggiano, co-head of North America M&A at JPMorgan.
The business in the sector has been fueled in part by the failures of telecom groups such as AT&T and Verizon, which have tried unsuccessfully to build integrated content and distribution centers.
Last week, AT&T announced it would launch WarnerMedia – the owner of CNN, HBO and Warner Bros. – which it agreed to acquire for $ 85.4 billion five years ago. In February, the telecommunications company also sold a 30 percent stake in DirecTV to U.S. private equity group TPG, valuing sick television activity at $ 16.25 billion – about a third of what AT&T paid for it six years ago.
Verizon announced this month that it was for sale Yahoo and other media assets to U.S. private equity group Apollo Global Management for $ 5 billion, just five years after the telecommunications group spent $ 9 billion on content assets, including the Huffington Post.
For Amazon, the MGM deal would be its biggest since the $ 13.7 billion acquisition of Whole Foods in 2017, and the latest signal that it is willing to spend a lot on content for its streaming services. Earlier this year the company signed an agreement worth about $ 1 billion a year to transfer to the NFL, one of the most recent acquisitions of sports rights.
Amazon spent $ 11 billion on content in 2020, up from $ 7.8 billion last year, as it doubled its efforts to attract and retain new members to its $ 119 Prime membership scheme. year.
In a recent shareholder letter, chief executive Jeff Bezos said there were now more than 200m members of the Prime Minister. In a separate presentation, the company said 175 million of them had watched its content streaming in the last year.