Amazon’s MGM Acquisition Cleared By European Union In Key Approval

Business

Amazon has won unconditional EU antitrust approval for its $8.5 billion acquisition of storied U.S. movie studio MGM, the European Commission said Tuesday.

It said the deal would not pose competition concerns in Europe.

That’s a big hurdle passed for the merger, announced last May. The U.S. Federal Trade Commission must still weigh in and is reportedly on the cusp of a deadline to contest the deal or not to – the latter amounting to a tacit greenlight.

“We’re pleased with the Commission’s decision and, with MGM, look forward to providing more choice of quality entertainment for viewers,” an Amazon spokesperson said.

The e-commerce giant with its massive market cap of $1.4 trillion is buying the century-old studio behind the James Bond and Rocky franchises from investors led by Anchorage Capital, whose founder Kevin Ulrich is chairman of MGM. The deal is the first in what had been a long-anticipated marriage of deep-pocketed big tech players and Hollywood. MGM’s expansive library of nearly 4,000 films and 17,000 TV shows will recast the 11-year old Prime Video streaming service — a driver of Amazon’s consumer loyalty program, Amazon Prime.

Related Story

'Fleabag' Exec Lydia Hampson Joins Sister & Signs First-Look Amazon Deal

The EU had publicly set March 15 as the provisional deadline to weigh in, but the FTC usually stays mum on cases unless it decides to sue. The org is said to have requested additional information from Amazon after the merger announcement. Once the digital behemoth supplied what was asked for a clock started counting down.

A more activist FTC led by new head Lina Khan has taken a tougher stance on antitrust and sued to block deals in other sectors (including Nvidia’s acquisition of Arm from Softbank and Lockheed Martin’s purchase of Aerojet). But the four-member FTC was said to be deadlocked 2-2 on whether to sue to block this particular transaction. (The White house nominated Alvaro Bedoya as the fifth commissioner back in Sept. but Senate approval is still pending.)

A challenge by the Feds is also seen as an uphill battle under existing antitrust law since MGM only has a small share of overall box office, and streaming services are proliferating in a highly competitive market. The last time the government took a media deal to court – AT&T/Time Warner – it lost and that combination was potentially more problematic.

In August, thirty-four groups from the Writers Guild of America West to Public Citizen appealed to the FTC to block the merger. It “is not simply a one-off deal for streaming content; it is the latest move in Amazon’s overarching strategy to create numerous interconnected points of dominance over businesses and consumers,” their letter said.

The Commission said that based on its investigation, the deal would not significantly reduce competition in the markets for: the production and supply of AV content:  the wholesale supply of TV channels: the retail supply of AV services: the production and licensing of distribution rights to third-party distributors of films for theatrical release: or the provision of marketplace services.

It said it found that business overlaps between Amazon and MGM are limited and where they do overlap “their combined market shares are low.”

In terms of “vertical links” it found that MGM’s upstream activities as a producer and licensor of AV content are limited compared to other market players, “cannot be considered as must-have” and that a wide variety of alternative content exists. “Even in the national markets where Amazon has a sizeable market presence among video streaming platforms, the Commission found that Amazon faces strong competition from other players.”

In theatrical releases and exhibition, the Commission found that “MGM’s films represent only a limited share of box office revenues in the EEA and that overall MGM is not among the top production studios, despite its rights over successful film franchises such as James Bond.”

“The Commission concluded that the addition of MGM’s content into Amazon’s Prime Video offer would not have a significant impact on Amazon’s position as provider of marketplace services.”

Must Read Stories

Fox News Cameraman Pierre Zakrewski Killed In Ukraine; Reporter Benjamin Hall In Hospital

European Union Clears Amazon’s Acquisition Of MGM In Key Approval; FTC Still Mulling Deal

Barack Obama Turns TV Host For ‘Our Great National Parks’; Netflix Sets Date For Docuseries

Awards Season Calendar: Dates For The Oscars, PGAs, WGAs, Grammys & More

Read More About:

Source: Read Full Article