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Regulators Might Block Amazon's MGM Buy

Company's size could make acquisition a 'red flag' for antitrust officials
By Rob Quinn,  Newser Staff
Posted May 26, 2021 2:45 PM CDT

(Newser) – Amazon announced Wednesday that it has reached an $8.45 billion deal to acquire MGM Studios—but before the online giant can declare itself the owner of the James Bond franchise and the rest of MGM's enormous library, antitrust regulators will need to give the deal the green light. Peter Kafka at Vox predicts that winning approval could be a tougher fight than Amazon expects. "Amazon will claim that it's too small in video for this to pose a competitive threat," he writes, but with the company already a major target for antitrust regulators, a deal this big is "akin to waving a red flag in front of the likes of Sen. Amy Klobuchar and daring her to charge." More:

  • A test for the Biden administration. The proposed merger comes as lawmakers are talking about tightening antitrust laws and could be a test of the Biden administration's policy on corporate consolidation, the Hollywood Reporter notes. The merger is likely to be a hot topic during the confirmation hearing that will follow Biden's nomination of an "antitrust czar."

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  • Top Republican "deeply concerned." "I’m deeply concerned by Amazon’s acquisition of MGM Studios," tweeted Rep. Ken Buck, the top Republican on the House Antitrust Committee, noting that Amazon's revenue grew 44% in the first quarter of this year. 'It’s critical that mergers and acquisitions involving monopoly companies experiencing tremendous and exponential growth are met with a greater level of scrutiny."
  • Deal feels "anticlimactic." Alex Sherman at CNBC notes that this is the first Big Tech buy of a legacy media company, but it was so predictable that feels "anticlimactic," not historic. He says Amazon's media presence is probably small enough for regulators to allow the deal, though there is little else that Amazon "can strategically acquire that wouldn’t lead the government to proverbially storm the company’s Seattle headquarters."
  • Why Amazon is snapping up MGM. Peter Kafka at Vox notes that Amazon is "playing a different game" from other streaming services. The Amazon video service is a bonus for people who subscribe to the Amazon Prime shopping service, which includes free shipping, and Amazon sees adding more content as a way to keep subscribers loyal. "So Amazon doesn’t want to dominate Hollywood. It just wants a toehold," he writes. "But even that toehold has been hard to get, and Bezos has been adamant for a while that the way to get it isn’t via niche shows like Transparent anymore—it’s by buying or making big blockbusters that lots of people will watch."
  • Part of a "shifting landscape," The MGM deal is part of a changing landscape for online video, with traditional studios keeping more of their content for their own services instead of licensing it to the likes of Netflix, the Wall Street Journal reports. A source tell the Journal that talks between Amazon and MGM were off-and-on for much of this year. The insider says Amazon was rebuffed when it tried to acquire Sony Pictures Entertainment.
  • "It's going to be a lot of fun work." If the deal does go through, Amazon will acquire a vast library of more than 4,000 movies dating back as far as the 1920s and 17,000 TV shows, the AP reports. The company says it plans to create new series with famous characters including Rocky, RoboCop, and the Pink Panther. "It's going to be a lot of fun work," Jeff Bezos said Wednesday. "People who love stories are going to be the big beneficiaries."
(Read more Amazon stories.)

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