Why James Bond Provides Complexity to Amazon’s Talks to Invest in MGM

Marketplace executives are stunned that Amazon is in negotiations to buy Metro-Goldwyn-Mayer in a offer that could attain $9 billion. Their shock will come from a belief that the cost tag seriously overvalues the studio behind James Bond, the Pink Panther and “Legally Blonde.”

Other providers have kicked the tires on MGM at a variety of factors for the duration of a prevent-and-get started sales process that has been dragging on for months. Sector insiders say that the true price of the studio is far more in the $5 billion to $6 billion variety alongside with the assumption of some credit card debt. Even then, they are skeptical that MGM’s prize asset, its stake in the 007 franchise, can be thoroughly monetized.

Which is for the reason that of the unprecedented creative control that is held by Eon Productions and its owner the Broccoli spouse and children, who have been stewards of the film collection relationship back again to Bond’s to start with on-screen visual appearance in 1962’s “Dr. No.” Below a deal initially hammered out by Albert “Cubby” Broccoli, MGM has the proper to finance and distribute all of the Bond motion pictures and splits the revenue with EON. Nonetheless, Broccoli’s heirs and Eon’s chiefs, Barbara Broccoli and her fifty percent-brother Michael G. Wilson, even now have ultimate say on anything from the film’s marketing and advertising and distribution strategies to whoever will slip into Bond’s tuxedo when Daniel Craig hangs up the job.

Insiders think that Broccoli and Wilson would most likely nix any strategies to debut Bond movies on Amazon’s streaming services Prime Online video and would insist on a theatrical launch, as is their contractual ideal. That was a critical stumbling block when MGM briefly floated the chance of selling the COVID-delayed Bond sequel “No Time to Die” to Apple for north of $600 million. The producers have also been resistant to have Bond pop up in spinoffs or television demonstrates, the kinds of ancillary qualities that could establish remarkably worthwhile. In addition, the movies have been heavily licensed to cable networks and streaming platforms, which could complicate issues.

“If Barbara isn’t on board with this, things could be very tough,” states an government who has labored on Bond films.

Furthermore, the franchise is in transition. Craig is leaving the part soon after 5 films and there is authentic issue that his tricky-residing womanizer character could not have as substantially resonance with younger generations. That’s problematic supplied that considerably of the worth of MGM is banked on Bond continuing to seduce audiences for decades to appear.

But MGM’s brass appears to be undeterred. Two months ago, Michael De Luca, chairman of the company’s movement picture team, and other executives created a formal presentation to Amazon. The PowerPoint was viewed by Mike Hopkins, senior VP of Amazon Studios and Prime Online video, who is an advocate for the deal. A person person in the know stated the parties are in an exceptional negotiating window.

Reps from Amazon and MGM did not instantly reply to requests for comment.

Other providers have been down this highway with MGM ahead of only for talks to collapse. MGM was conversing to Apple in early 2020 just before COVID upended the landscape, and other legacy studios took a appear at the company.

The timing might work to MGM’s gain. AT&T is spinning off WarnerMedia and combining it with Discovery, significantly enhancing that company’s information choices at a time when it is trying to appeal to a lot more subscribers for HBO Max. That may perhaps leave other rivals seeking to get content producers, and MGM, together with Lionsgate and AMC, is amongst the few digestible media attributes that might be on present.

The sale approach has been on and off since board chair Kevin Ulrich, whose hedge fund Anchorage Cash is a key shareholder, is not persuaded he wishes to provide even as MGM’s other buyers are pressuring him to cash out at a time when streamers are wanting to bolster their content material arsenals.

Goldman Sachs, JP Morgan and Morgan Stanley have represented MGM at various times in the earlier several several years and the total system has been “weird,” in accordance to an insider, proudly owning to a blend of intense bankers and traders with different agendas.

“It’s been like persons expressing ‘My household is not for sale but what would you pay me for it? Oh no, it is not for sale,” as one particular human being explained it.

Under De Luca, the movie side of MGM has been generating the form of splashy acquisitions that could place it for a sale, lining up assignments like Paul Thomas Anderson’s “Soggy Bottom” and Ridley Scott’s “House of Gucci.” Resources said the $9 billion valuation financial institutions a large amount on MGM’s impending slate making potent box business returns and Tv set licensing revenue.

The authentic value of MGM is its library, while it has been seriously exploited. The company boasts 4,000 film titles, together with classics and hits these as “Four Weddings and a Funeral,” “Silence of the Lambs,” “The Birdcage” and “Stargate.” A lot of of its most common movies, this sort of as “Rocky” series, have by now been rebooted as the “Creed” movies, or failed to be revived, as was the circumstance with “Ben-Hur” and “RoboCop.” Other franchises, these types of as Peter Jackson’s “The Hobbit,” have wrapped up.

The enterprise has had success on television, producing the likes of “Fargo” and “The Handmaid’s Tale,” as perfectly as in the unscripted realm with “The Voice” and “Survivor,” but rival studios were even now astonished by the $9 billion price tag. Sources observed that four a long time in the past, Amazon paid out $13.7 billion for the entirety of the Entire Foods grocery store chain, only a couple of billion additional than it could pay back for MGM.