Amid a wave of M&A fever, will Amazon’s $ 8.45 billion takeover of MGM prompt Silicon Valley rival Apple to refresh its shopping list to include a Hollywood studio?
The iPhone maker already has a giant footprint in entertainment thanks to its services division – which includes Apple TV +, Apple Music, the App Store, iCloud and more. Its revenue topped $ 16.9 billion in the first quarter, up from $ 13.3 billion a year ago. period and has 660 million paying subscribers in total.
paid subscribers in total. And CEO Tim Cook described streamer Apple TV + ‘s ambition to “be one of the most sought-after platforms for storytellers,” naming comedy series Ted Lasso, drama The Morning Show and miniseries Defending. Jacob like his titles with “an important buzz”.
But the streamer is seen by some Wall Street analysts to lack several regular hits, which has led some to argue for a studio acquisition. A Morgan Stanley study published in April found that only 8% of people in the United States said they used Apple TV +, a figure well below that of Netflix (58%), Amazon Prime (45%) and Disney + (31%).
“Apple made a major strategic mistake by not buying a Hollywood studio as Amazon, Disney, Netflix and others run off with content,” Wedbush analyst Dan Ives said. “Content is king and Apple has built a mansion with virtually no furniture. MGM was an obvious acquisition for Apple, and they missed a huge opportunity.
Hal Vogel, CEO of Vogel Capital Management, suggests that Cook is “afraid of shareholder backlash if he goes to Hollywood in a big way.”
The likes of Apple, Alphabet’s Google, and Facebook are often cited as money-rich tech titans that could swallow up Hollywood studios without too much financial trouble. But two of them also pointed out their continued lack of interest in producing more traditional premium content. Google’s Facebook and YouTube have already tried to chart bigger spurts of scripted content, then slashed their ambitions.
But AT & T’s $ 43 billion deal to merge WarnerMedia with Discovery and purchase of MGM from Amazon highlights “escalating streaming wars as potential catalyst for next wave of industry consolidation with some of the big tech companies increasingly seen as potential buyers, ”CFRA Research analyst Tuna told Amobi.
Apple could choose to bolster its Hollywood division with a mega-buy from a studio the size of, say, Lionsgate, which is mentioned as a possible takeover target given its relative lack of scale – Lionsgate’s market cap is $ 3.8 billion, while Apple’s is $ 2.1. billion – as well as its library of 17,000 titles and its film and television franchises such as Hunger games, dusk and his drama Starz Power.
“Apple and Amazon are unique among tech giants in that they each have streaming services, so there are synergies in owning content libraries,” notes Michael Pachter, analyst at Wedbush. Or it could follow Netflix’s lead and look to acquire smaller Hollywood Shingles – like Mark Millar’s comic book company Millarworld – to increase its intellectual property.
“Amazon’s Smart Acquisition of MGM Will Boost Studio Mergers & Acquisitions by Its Major Streaming Technology Competitors [that] are now facing a content crisis, ”says Peter Csathy, president of consulting firm CreaTV Media. “Netflix is looking for franchises. Apple too. Even Amazon may not be finished yet, for both offensive and defensive reasons. “
This story appeared in the May 26 issue of The Hollywood Reporter magazine. Click here to subscribe.