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History of AMZN

Important events

May 272021

Hear the lion roar

After much speculation, Amazon and MGM are officially merging in a deal worth $8.45 billion.

In Amazon’s most ambitious move yet into the entertainment bizz, the e-commerce company is buying MGM Studios (they’re the ones with the famous roaring golden lion logo) for $8.45 billion, the two companies announced on Wednesday. The purchase will be Amazon’s second biggest ever, and it’s the second major media merger in as many weeks after AT&T and Discovery joined forces. It’s all part of a market-wide media consolidation that is throwing together big tech and Hollywood, and changing the landscape of consumer entertainment. The deal shows how eager Amazon is to spend some serious dosh as it fights to stay relevant in the saturated streaming market. Other media giants like Netdlix and Disney have also been looking to boost their content libraries, but Amazon spent over $11 billion on video and music content in 2020, up from $7.8 billion the year before, and it’s clear that Bezos is serious about making his mark in the space.

The real financial value behind this deal is the treasure trove of in the deep catalog that we plan to reimagine and develop together with MGM’s talented team. It's very exciting and provides so many opportunities for high-quality storytelling,

said Mike Hopkins, senior VP of Prime Video and Amazon Studios.
May 262021

Amazon's turn in the firing line

Just as Apple’s antitrust case wraps up, another begins. Amazon is being sued by Washington DC over the impact of its pricing for merchants on consumers. Looks like the market has faith in its firepower though, because the price barely budges.

As the antitrust battle between Apple and Epic games draws to a close, big tech is hit with another lawsuit as Washington DC hands Amazon its first antitrust case in the U.S.

Karl Racine, attorney-general for the District of Columbia has accused Amazon of violating the district’s competition laws by forcing merchants to follow restrictive selling rules and crushing competition. The problem is that the e-commerce giant charges third-party merchants a fee of up to 40% of product price through its website, but at the same time, it doesn't allow its merchants to sell those products for a lower amount on other platforms (including their own websites, or other popular sites like Walmart) – meaning that consumers are having to pay that 40% mark-up no matter where they buy the product, merchants are having to overcharge for their products, and other online retailers don't really stand a chance.

The lawsuit comes as an army of attorneys general take fire at big tech companies with charges of anti-competitive behavior – and notably, Karl Racine is also the guy behind the antitrust cases against Google and Facebook filed in the last couple of years. Amazon has already been the target of a lawsuit in the EU over the treatment of its merchants, but this is the first time it’s happened in the U.S. Unsurprisingly, Amazon has disagreed with the lawsuit, saying that in fact its policies always aim to keep prices low.

The DC attorney general has it exactly backwards – sellers set their own prices for the products they offer in our store. Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively,

an Amazon spokesperson said
May 192021

The name's Bezos. Jeff Bezos...

Amazon is pulling out the martinis (shaken, not stirred) while in talks with MGM Studios about acquiring the iconic film studio behind the James Bond franchise.

News hit the stands that Amazon is rumored to be in talks with MGM, which is one of Hollywood’s most famous film studios (they’re the people with the roaring golden lion logo, you know the one) and one of the few left that hasn’t been taken over by a big conglomerate on the back of a wave of mega-consolidation. Warner Bros is now operating within Discovery (they’ve just moved over from AT&T), Paramount sits within ViacomCBS, and Fox is inside Disney.

The MGM move comes on the back of a major revamp of Amazon’s entertainment plans, for which they’ve called in the big man himself – staff were told last week that CEO Jeff Bezos would be coming back to the company to take control of a new division, the ‘Global Media & Entertainment’ organisation”. The new segment will include all of the company's entertainment content, the breadth of which has been expanding in recent years. Last year, the ecommerce giant spent $11 billion on music and film content for Prime, up from $7.8 billion on 2019, and has been sneaking its sticky little media fingers into all sorts of other pies, including a deal with NFL worth over $1 billion per year to show Thursday night Football. In its most recent earnings, Bezos shared that Prime now has over 200 million members, so things are off to a good start.

A deal between the two could be the beginning of a whole new round of consolidation, kicked off by Monday’s deal between AT&T and Discovery. People have been sniffing around MGM for a while now, but the potential $9 billion price tag on this deal is higher than even Apple was willing to talk about three years ago. Amazon’s deep pockets could be what sets the company apart from the rest – Bezos is certainly putting his money where his mouth is. Investors are staying cautious for now though, and the share price barely shifted on the news.
May 122021

Amazon shakes the magic money tree

People are wondering why Amazon (one of the richest companies in the world) is borrowing $18.5 billion in a debt sale. Does it need the cash? It spooks the market slightly, sending prices down just over 3%.

Amazon issued a sizable $18.5 billion of debt in eight parts, apparently in order to buy back stock and refinance debt – and proving that even one of the richest companies in the world can be tempted by cheap borrowing costs. As of the end of March, Amazon held over $73 billion in cash, equivalents, and marketable securities, and the company posted its second quarterly revenue in the $100 billion club, so it’s not like it needs the dough.

This is Amazon’s biggest bond sale, and it’s the second-largest to take place this year after Verizon’s $25 billion offering in March. The online giant has actually been on a bit of a shopping spree since the pandemic began, building data centers and new warehouses around the world as it deals with the surge in demand spiked by the pandemic. Its purchases of equipment and property totalled $45 billion for 2020, compared to $20 billion the year before.

The price of the debt was obviously just too good to pass up - on the two-year portion of the debt it paid just 0.1 percentage points above the equivalent US treasury bill (according to Refinitiv data) – showing that bond investors see the debt as super low risk.

“They can grow into this leverage. If you’re able to borrow for reasonably cheap, and then you’re able to get the operating leverage to go with it, it results in a lot of earnings,”

said head of North America investment grade at Incesco, Matt Brill, to Bloomberg TV.
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