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Amazon is reportedly negotiating to acquire MGM for about $9B

businessinsider.com

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Re: Amazon is reportedly negotiating to acquire MGM for about $9B

#111

Post by huitzitziltzin »

nerdponx wrote: post #49
huitzitziltzin wrote: post #27

Earlier quoted context omitted.

what job do you want the FTC to do here? I assume you think there is an antitrust angle on this potential acquisition? I am an economist and that is my field. I disagree with your take, if that is what you mean. This is a vertical merger. Vertical mergers are quite different in their welfare effects to consumers than horizontal mergers. Vertical mergers can frequently be welfare-improving to consumers. Indeed, this i…

> Indeed, this is why vertical mergers are harder to regulate than horizontal mergers. The welfare effects are not obvious ex ante. This has a decent chance to be pro-consumer. I don’t see any reason for the FTC to object to this on antitrust grounds. I'm curious how this could possibly turn out to be anything but anti-consumer. I'm sure that in general and in the past there can be and have been welfare-improving ver…

> I'm curious how this could possibly turn out to be anything but anti-consumer. ... this particular one seems questionable.

Again... why? The easiest vertical merger cases I teach to undergrads are welfare-improving. I don't see any reason to think that this one is anti-consumer. What do you think will go wrong here?

> I would like them to carefully and thoroughly evaluate the welfare effects of this merger,

They will b/c that's what they do. The OP to whom I was replying suggested that the FTC had "failed" us somehow. I would not expect the FTC to find any grounds to block this acquisition, though I could be wrong.

Re: Amazon is reportedly negotiating to acquire MGM for about $9B

#112

Post by bhupy »

usrusr wrote: post #72
ncallaway wrote: post #36

Earlier quoted context omitted.

The vertical integration of the distribution of media and the production of media is extremely problematic because of the way copyright operates in this country. I think you have to examine vertical integration in copyright affected industries differently than you would in, say, the vertical integration of steel production with a company that consumes steel. The interaction with copyright invariably creates issues fo…

Do you think consumers were better off back when cinemas and studios were one (MGM was Loew)? Was the United States vs Paramount of 1948 a mistake?

One glaring difference between 1948 and 2021 is that distribution is basically free now. Whereas in 1948, one's ability to consume media was dictated by their physical location, today there is close to zero marginal cost to deliver digital media and low barriers to entry for new entrants. Just consider how many streaming services there were 10 years ago vs today.

No human consumes enough TV media to warrant subscribing to every single streaming service at the same time, and there's certainly a lot that can be improved to make the "a la carte" experience of selectively subscribing/unsubscribing to services on demand more seamless — but the way the industry operates across the entire supply chain is dramatically different today.

Re: Amazon is reportedly negotiating to acquire MGM for about $9B

#113

Post by jjcon »

huitzitziltzin wrote: post #104
jjcon wrote: post #85

Earlier quoted context omitted.

> Do you see this leading to increased prices or a reduction in quantity consumed? We’re way past that at this point. Amazon is closer to a level of government than traditional company. They are already under multiple antitrust investigations in multiple countries and jurisdictions so it’s nuts for you to go all pikachu face on the comment that they may be guilty of such. The amount of power Amazon has over media, re…

> Amazon is closer to a level of government than traditional company. I'm not sure what this could possibly mean. > is a threat to a well regulated democracy Ok - tell me how. Is Jeff Bezos going to... buy the Presidency? A Senate seat? Or... ? I really don't see what you have in mind. > IMO Amazon should be split into a dozen companies. You can do this if you want. You could split AWS from the retail operation, I gu…

Did I say anything about bezos? No. Quit deflecting and making strawmen.

Amazon is already under antitrust charges in the EU and under investigation for antitrust in the US, stop ignoring that fact.

Re: Amazon is reportedly negotiating to acquire MGM for about $9B

#114

Post by throwaway1777 »

dalbasal wrote: post #66

There reality of current equity valuations is such that, if sustained, there is some some pretty savage consolidation to come. The only limit is antitrust, or fear of. $9bn is 0.5% of AMZN's current market cap, so $9bn represents a daily price fluctuation. They also have $45bn in cash reserves, so amazon could buy 5 MGMs without borrowing or issuing stock. That's not even a lot! Apple, Google & FB have $200bn, $140bn…

Apple does offer a dividend fwiw. The others often use cash for share buybacks which is part of why the price is so high. So it’s not entirely like they just let the money sit there.

Re: Amazon is reportedly negotiating to acquire MGM for about $9B

#115

Post by scottyah »

vishnugupta wrote: post #108
dalbasal wrote: post #66

There reality of current equity valuations is such that, if sustained, there is some some pretty savage consolidation to come. The only limit is antitrust, or fear of. $9bn is 0.5% of AMZN's current market cap, so $9bn represents a daily price fluctuation. They also have $45bn in cash reserves, so amazon could buy 5 MGMs without borrowing or issuing stock. That's not even a lot! Apple, Google & FB have $200bn, $140bn…

Amazon always has and continues to invest internally to expand e.g., new AWS regions, warehouse automation through robotics most of which are extremely capital intensive. Though your observation is right that MGM acquisition does make sense for Amazon because they OK to pay a premium to fast-track expanding their media business. The way I see it, Amazon, as a growth machine, keeps its growth options (organic/inorgani…

Eastern companies like yamaha and hyaundai. dirtbikes to pianos, cars to housing

Re: Amazon is reportedly negotiating to acquire MGM for about $9B

#116

Post by ghaff »

dageshi wrote: post #102
GeekyBear wrote: post #79

Earlier quoted context omitted.

I agree that streaming is still cheaper, but some sort of mandatory licensing scheme for video content would be able to put a stop to the current balkanization of television content.

In any other industry, having companies compete against each other to create the best product in order to attract customers is the ideal situation... except television? People might not like balkanization of content, but it forces different services to compete against each other in a way that produces more and better content overall. More to the point, it's frankly no different to how TV channels used to work in the…

I wonder how many people who complain about the balkanization of content across multiple streaming services also weren't a fan of the cable bundle.

Presumably, if you had mandatory licensing, you end up with a monopoly or duopoly of streaming services. (Which is more or less what you have in music--though it's arguably a triopoly if you count Amazon.) That's not necessarily bad; it's been pretty much OK (for consumers if not creators) in music. Though it would presumably reduce the incentive to produce tentpole content that brings people to your specific service.

Re: Amazon is reportedly negotiating to acquire MGM for about $9B

#117

Post by ncallaway »

lotsofpulp wrote: post #50
ncallaway wrote: post #36

Earlier quoted context omitted.

The vertical integration of the distribution of media and the production of media is extremely problematic because of the way copyright operates in this country. I think you have to examine vertical integration in copyright affected industries differently than you would in, say, the vertical integration of steel production with a company that consumes steel. The interaction with copyright invariably creates issues fo…

> The interaction with copyright invariably creates issues for the end-consumer, which is why consumers in the media ecosystem are often better off when distributors and producers are separate. And addressing it via enforcing separate distributors and producers allows the copyright issue (the real issue) to go unchecked, since politically, it’s harder to attack it as a problem. It might even be politically necessary…

To me, the problem with copyright law is that there are entities that have businesses that are built on copyright protection that are so powerful they can nearly dictate what the copyright laws are (cough Disney cough).

So, from my perspective, any system that allows those powerful entities to continue to accumulate more power and wealth is always going to harm efforts to change copyright law.

We need to weaken the power that companies wield over copyright law, and that's harder the more powerful those companies are.

Re: Amazon is reportedly negotiating to acquire MGM for about $9B

#118

Post by thiago_fm »

bilbo0s wrote: post #29
lotsofpulp wrote: post #16

Earlier quoted context omitted.

The better way to address this would be reducing copyright lengths to 20 years or something reasonable.

This. Why is everyone ignoring these obvious solutions? I feel like there are these enormous movements out there to advance byzantine solutions to problems we could readily address with simple new rules. What's worse, these movements champion things like break ups, which will never work for the vast majority of these firms. Many are not monopolies, and do not operate as trusts. (Though FB, Google, and Amazon come clo…

Agree. Those copyright laws were put into place a long time ago and made sense in the context of the past. Nowadays, they should just create a new one that fits the new distribution ways.

Re: Amazon is reportedly negotiating to acquire MGM for about $9B

#119

Post by jjcon »

huitzitziltzin wrote: post #105
mnd999 wrote: post #96

Earlier quoted context omitted.

Exclusive content.

Netflix has exclusive content. ABC, NBC, Discovery, ... all have exclusive content. Why does Amazon buying MGM and getting some exclusive MGM content harm consumers ?

Less competitive marketplaces harm consumers. Consolidation means less competition. Amazon is already under antitrust charges and investigations in the EU and US for these types of misdeeds.

Re: Amazon is reportedly negotiating to acquire MGM for about $9B

#120

Post by ncallaway »

huitzitziltzin wrote: post #76
ncallaway wrote: post #36

Earlier quoted context omitted.

The vertical integration of the distribution of media and the production of media is extremely problematic because of the way copyright operates in this country. I think you have to examine vertical integration in copyright affected industries differently than you would in, say, the vertical integration of steel production with a company that consumes steel. The interaction with copyright invariably creates issues fo…

Vertical integration in steel production could as easily involve intellectual property as it does here. As a hypothetical example, imagine if Apple had sourced the M1 chip from a third party which it now proposed to buy. There would be intellectual property at stake there too. This case is no different. And indeed, in the Apple hypothetical you could well expect consumers to be better off and for exactly the same rea…

> Vertical integration in steel production could as easily involve intellectual property as it does here.

I didn't say Intellectual Property, I said Copyright. Copyright—much more than other forms of IP—has a significant impact on our shared culture and cultural transmission. Yes, there may be other factors with IP that we should consider when dealing with mergers, but end-users and everyday people are harmed much much more often due to copyright issues than they ever are due to patent and trademark issues.

> I do not know exactly what will happen in this case, but it seems like Amazon's proposing to buy a single studio is very unlikely to result in harm to consumers.

Sure, and I do not know exactly what will happen when we place a straw on a camel's back. But in each case it seems like it's very unlikely that the camel's back will break. It's a sorities paradox in reverse: Which individual acquisition is the point at which network effects start creating problems. Each individual M&A is unlikely to be the one that causes the problem, and yet if you allow each one because it is unlikely, eventually the system stops functioning correctly.

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