Daily Brief: Amazon Agrees To Buy Iconic Movie Studio MGM. Your Move, Netflix.

Daily Brief: Amazon Agrees To Buy Iconic Movie Studio MGM. Your Move, Netflix.

almost 3 years ago3 mins

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He is CEO, hear him roar: Amazon agreed on Wednesday to buy iconic movie studio Metro-Goldwyn-Mayer (MGM) for $8.5 billion.

What does this mean?

The spread of streaming services is putting pressure on Amazon to do more with Prime Video – a key draw for the company’s 200 million-plus paying members. And MGM – the film and TV production and distribution powerhouse behind James Bond and The Handmaid’s Tale – will give Amazon instant access to a wealth of classic (and rebootable) content for less than the $11 billion it spent on shows and movies in 2020.

Still, it’s not only the biggest deal the company’s done since its near $14 billion takeover of Whole Foods back in 2017: it’s one that Amazon seems to think is strategically significant enough to reportedly pay around $3 billion more than both Apple and Comcast were offering.

Amazon’s largest deals

Why should I care?

For markets: Fortune favors the Disney+ game plan.

Amazon’s investors will hope MGM breathes fresh life into its streaming service, helping the company hold on to existing customers and attract new ones. And the signs are encouraging: it seems to be following in the footsteps of Disney+, whose blockbuster back catalog is one of the main reasons for its success. That’s leaving Netflix – which has taken the contrasting approach of creating original content over acquiring the rights to existing media libraries – looking increasingly isolated.

Seeking shows

The bigger picture: No time to buy?

Regulators on both sides of the Atlantic are also likely to be less than thrilled by Amazon’s antics. They’re already worried about the company’s anticompetitive dominance in several markets, with numerous probes ongoing. The latest – launched just this week – has seen Amazon taken to task for allegedly preventing third-party ecommerce sellers from offering their products cheaper elsewhere, keeping prices unfairly high for consumers.

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Made.com Plans Its Public Debut

Made image

Move over, amateurs: UK furniture retailer Made.com announced this week that it’s planning to make its stock market debut on the London Stock Exchange.

What does this mean?

If this pandemic has made us connoisseurs of anything, it’s sitting, sleeping, and curling up in the foetal position as we sing “The sun’ll come out… tomorrow…” through broken sobs. So it makes sense that out of the ashes of this sedentary lifestyle, Made.com should’ve emerged keener than ever to debut on the UK stock market.

The company’s plan is to reinvest the money it makes from the initial public offering (IPO) into the business, grow its annual sales fourfold by the end of 2025, and expand beyond its current Europe-centric focus. The paperwork didn’t mention what valuation the company’s targeting, but reports have put it around $1.4 billion. That’s both three times last year’s sales and ahead of close German rival Westwing, which is only valued at twice its sales.

Why should I care?

The bigger picture: The IPO frenzy is winding down.

Made.com or no Made.com, last quarter’s record number of IPOs has started drying up. There are a few reasons why: inflation-fueled stock market turbulence, investors’ souring mood toward high-growth companies, and the disappointments of recently listed firms Bumble and The Honest Company, whose shares have dropped below their IPO prices. And as long as there’s the potential for a lukewarm reception, companies aren’t about to risk selling their shares on the cheap.

US IPOs by quarter

Zooming out: Firms are getting mixed messages.

Made.com’s announcement comes just as the UK laid out plans to block certain companies from joining the London Stock Exchange. The government’s worried about dirty money in its financial markets, so it wants to halt any listings that would, say, give a foreign state access to national or commercial interests. But company execs think this an odd move, directly undermining the government’s bid to lure more young, fast-growing companies onto its stock market.

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