Could Apple Be Ready to Gobble Up MGM Studios Entirely?

We’re living more than ever in an era marked by moments of transition, and nowhere is this more apparent than the rise (and impending fall) of many iconic Hollywood studios as the world shifts more and more into the realm of streaming services.

While many studios have bowed to the inevitable and launched their own streaming services, it seems like this approach hasn’t been available to the legendary MGM, which has spent the past couple of years trying to partner with some of the other big players in the game, or possibly even sell itself off wholesale — apparently without much success.

In fact, it was almost exactly a year ago that we first head that Apple and MGM were reportedly in talks that among other things were said to have included the possibility of bringing its substantial movie library to Apple TV+.

At the time MGM was also looking for a digital streaming partner for its Epix cable channel, and had also been shopping itself around to the likes of Amazon and Netflix, however the deal looked like it might be promising for Apple thanks that MGM’s ownership of large swaths of popular content such as the James Bond franchise.

Unlike its rivals, however, Apple has also shown a reluctance to license content from other studios, since it wants to own and control all the pieces and not be held hostage by content owners. A content licensing deal with MGM seemed unlikely, but some reports suggested that a full-scale acquisition may have been on the table as well.

Up for Grabs

While those earlier reports were merely rumours from industry insiders, it’s now become apparent that MGM is actually up on the auction block, with The Wall Street Journal (via Apple News+) reporting that the studio has begun a formal sale process.

MGM still expects to court one of the major streaming companies, with the WSJ reporting that it believes that the content library that it has to offer will “prove attractive to companies pursuing growth in streaming video.”

The studio has reportedly contemplated an outright sale in the past, but most potential buyers — presumably including Apple — have balked at the price tag it was asking for.

At this point, however, MGM has an estimated market value of around $5.5 billion, and with it beginning a more public sale process, most analysts are estimating an asking price of around $5 billion, which could be a bargain unless a bidding war ensues.

Which could happen, considering that many streaming providers are frantically jockeying for position, especially as big studios like Disney, CBS, and NBCUniversal have launched their own services and begun clawing back on content licensing deals with independent providers like Netflix and Amazon Prime.

In fact, these latest rounds in the streaming content wars actually makes Apple’s choice to eschew licensing third-party content seem somewhat prescient. While Netflix and Amazon Prime do have enough original content in their arsenal to survive the loss of other big-name licensed shows, it’s still been a rough road as massively popular franchises like Marvel Cinematic Universe and Star Wars move to Disney+; Apple, on the other hand, has nothing to lose.

On the other hand, if Apple were to buy MGM outright, this wouldn’t be a content licensing deal — instead all of MGM’s properties would become Apple’s own, including not only the entire James Bond franchise (and some related rights to producing new James Bond content), but also the Rocky franchise, The Handmaid’s Tale, and Vikings.

Apple would also gain the entire back-catalog of MGM movies — something that rumours have suggested Apple is willing to do under the right circumstances — and that’s no small amount of legendary content, including such films as Dances with Wolves, Silence of the Lambs, Rain Man, and The Terminator.

A Better Deal

According to the WSJ report, Apple and MGM were in talks as far back as 2018, when MGM actually fired its then-CEO Gary Barber as a result, since the Board of Directors hadn’t authorized the conversations.

While Barber was asking for more than $6 billion at the time, that all fell apart after he was shown the door, and MGM Chairman Kevin Ulrich felt the asking price was too little, as he told investors that MGM would easily be worth more than $8 billion in the next two to three years.

While Apple was invited back to the table by MGM back in 2019, those talks didn’t appear to bear any fruit, and it’s possible Apple may be playing the long game and simply waiting MGM out. As the WSJ notes, at this point MGM’s privately traded shares have dropped to about two-thirds of their previous value, and in fact the 2018 high point of $120 per share seems to have been bolstered primarily by the rumours of a possible deal with Apple.

MGM has also been hoping to bolster its image with the release of the latest Bond film, No Time to Die, expecting that the release of the film would increase the company’s value and spark interest from a potential buyer. However, its decision to delay the film into early next year as a result of the ongoing pandemic is going to result in a big hit to its 2020 earnings, making it a good time to try and pick the studio up at a bargain price.

That is if $5 billion can be considered a “bargain,” but with what MGM brings to the table, it really is, and considering that Apple has extremely deep pockets and a willingness to spend huge amounts of money on its own original productions compared to its rivals, there’s no doubt that if Apple wants MGM in its portfolio it should have no problem acquiring it.

That said, even though Apple has acquired many smaller companies over the years, there have been very few massive acquisitions, and in fact MGM would be the biggest. Apple famously acquired Beats for $3 billion back in 2014, as well as Intel’s 5G modem business for $1 billion last year, which was a bargain when you consider that it cost $4.5 billion to settle its fight with Qualcomm, so $5 billion for everything that MGM has to offer doesn’t seem all of that unreasonable.

[The information provided in this article has NOT been confirmed by Apple and may be speculation. Provided details may not be factual. Take all rumors, tech or otherwise, with a grain of salt.]