Media expert says Amazon has no interest in competing directly with Disney

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on May 25, 2021
  • Peter Kafka says Amazon is justified to pay $9 billion for MGM Studios.
  • The tech giant is not interested in penetrating the theatrical business.
  • Amazon-MGM deal is unlikely to bump into regulatory problems.

The Wall Street Journal reported that Amazon Inc. (NASDAQ: AMZN) inched closer to acquiring MGM Studios for about $9 billion (£6.37 billion) on Tuesday. In comparison, Disney brought Marvel and Lucasfilm under its umbrella for an inflation-adjusted $9 billion-plus.

Peter Kafka’s remarks on CNBC’s “Tech Check”

According to Recode senior editor, Peter Kafka, however, Amazon is justified in paying so much more for a similar acquisition. On CNBC’s “Tech Check”, Kafka said on Tuesday:

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“At the time when Disney bought those two studios, no one was thinking about streaming, no one was thinking about turning these things into extended universes. But now, that’s what everyone is trying to do. That is why Amazon does have to pay $9 billion for MGM.”

Kafka further opined that Amazon wasn’t making this investment to penetrate the theatrical business. From an economic standpoint, he added, it would also be a questionable move to take James Bond out of the theatres after the acquisition, as it’s an international box office event that makes a ton of money.

In separate news from the United States, Tesla said it set up a site in China to store car data locally.

Amazon-MGM deal is unlikely to bump into regulatory problems

Discussing the Amazon-MGM deal and the comparison with Disney, Kafka went on to say on CNBC’s “Tech Check”:

“Disney was a content company that bought another content company. Amazon is not a dedicated content company. It’s just one of the things it does. It’s like when Amazon bought Whole Foods. It didn’t revolutionise or restructure the food business. They just bought it as one of the many things that they do. Similarly, content is one of the many things they do, which is why I don’t think they’re competing head-to-head with Disney or Netflix. Even though it’s a $9 billion business, but it’s still a side business for Amazon.”

The Recode Media host saw MGM Studios as one of the largest and impactful things that Amazon could buy without bumping into real regulatory problems.

Amazon opened at $3,266 per share in the stock market on Tuesday and slid to an intraday low of $3,221 per share in a few hours. The U.S. tech giant, however, is still trading higher than $3,186 per share, at which it had started the year 2021. At the time of writing, Amazon is valued at $1.64 trillion and has a price to earnings ratio of 61.76.

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