Amazon is reportedly negotiating to acquire MGM for about $9B • Hacker News Board

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

#201

Post by dalbasal » Tue, May 18, 2021, 6:28 PM UTC

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…

I agree, but...

2021 Amazon has AWS, which is hugely cash generative... hence the growing cash balance. They can't invest faster than it accumulates. Financially, they're like Apple, Google, Etc. now.

Also, "capital intensive" is relative. Warehouse's investment numbers tend to be publicized, because politics. A big one is $200m, and that's a "media story" number which may be higher than the real, "capital investment" amount.

Company valuations are one thing, but $10bn is a lot of capital. It's hard to actually invest that much. That's why the big software companies have so much of the damn stuff.

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

#202

Post by dalbasal » Tue, May 18, 2021, 6:29 PM UTC

efficax wrote: post #182

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…

datacenters for all 4 are a huge capital investment. Perhaps less so for Apple, but Amazon, Google and Facebook all run their own datacenters and all of them will have to continue expanding their datacenter footprint if they continue to grow. That being said, it does seem like equity markets are in a bubble. Tesla at least is absurdly overvalued. If i had signifcant stake in TSLA I would be getting out asap and let s…

Huge yes. Huge relative to amzn & apple is a different matter.

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

#203

Post by dalbasal » Tue, May 18, 2021, 6:30 PM UTC

sangnoir wrote: post #170

vmception wrote: post #88

Earlier quoted context omitted.

What’s the provocative part? I like the insight. What you are saying is that liquidity needs to get much deeper to account for all the currency made available and consolidated.

The idea of Tesla buying and discontinuing GM for the sake of reducing competition is pretty provocative.

That is precisely what I meant by provocative.

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

#204

Post by dalbasal » Tue, May 18, 2021, 6:33 PM UTC

throwaway1777 wrote: post #114

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.

True, this is why I offered that caveat at the end. None of what I said is true in an absolute sense.

Whether or not they pay dividends or buy back stock, the average net is large. That's why they've accumulated these record busting sums.

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

#205

Post by SyzygistSix » Tue, May 18, 2021, 6:35 PM UTC

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 could pay and treat their employees better. That would be an investment that would make me consider using their service again.

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

#206

Post by dalbasal » Tue, May 18, 2021, 6:36 PM UTC

SyzygistSix wrote: post #205

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 could pay and treat their employees better. That would be an investment that would make me consider using their service again.

Technically that'd be a cost, not an investment.

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

#207

Post by dalbasal » Tue, May 18, 2021, 6:40 PM UTC

adventured wrote: post #54

GeekyBear wrote: post #28

Isn't it the case that a radio station doesn't need the permission of a composer to play their work on the radio, but instead pays a non-negotiable fee? Internet radio stations work similarly, but also distribute money to the performer(s) and label. The core idea of forced licensing to any streaming service willing to pay a set fee could do a lot to prevent consumers from needing to pay for so many streaming services…

As a radio station you typically go through one of a few licensing companies, which you pay royalty checks to. For example: https://www.ascap.com/help/royalties-and-payment/payment/who... https://www.bmi.com/licensing You can't just play any music you want on the radio without permission (with an automatic fee attached). I've owned commercial radio stations and while you could play a vast amount of music with no hass…

Can artists opt in/out of this?

Any thought on how this could be applied to youtube/podcasting/etc. I miss music shows.

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

#208

Post by influx » Tue, May 18, 2021, 6:40 PM UTC

SyzygistSix wrote: post #205

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 could pay and treat their employees better. That would be an investment that would make me consider using their service again.

Amazon already pays their Warehouse workers $15/hour or more. How much should they get paid?

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

#209

Post by charwalker » Tue, May 18, 2021, 6:42 PM UTC

kingsuper20 wrote: post #46

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…

>Vertical mergers can frequently be welfare-improving to consumers. As can be horizontal mergers given economies of scale and/or network effects. It's an interesting area of the law (anti-trust) as it strikes me as one of the few really excellent uses for the heavy hand of the government. Lots of cooks in the kitchen of legislation. It does grate my ears to hear the word 'consumer' rather than 'citizen' but I suppose…

> given economies of scale and/or network effects.

Other than competition, easily bought out when you're working with a $600 billion valuation of Amazon, or loss of consumer interest, what incentive does a for profit company have to shift any gains from economies of scale/etc to consumers? Why not make your product for 10% less, charge the same, and pass on the difference to shareholders?

Apple is a great example. If they buy out the group making the M1 to reduce cost and improve supply chain efficiency, what incentive is there to lower prices especially for a company whose marketed image is all about premium? That money is going right into ongoing costs or to recoup the initial merger costs.

Any improvement to consumers are either hypothetical, relate directly to fending off competition, listed as bullets on a PowerPoint slide between VPs, or carefully constructed to pass regulatory questions, not to help their customers save money.

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

#210

Post by throwaway_kufu » Tue, May 18, 2021, 6:43 PM UTC

dageshi wrote: post #35

throwaway_kufu wrote: post #22

Earlier quoted context omitted.

For a little background on the movie industry and antitrust law, the Hollywood studios once upon owned everything from the way movies were produced, distributed and exhibited. The monopoly held by the studios was effectively broken up following WWII. Yes, there were multiple studios competing but individually they were engaging in antitrust behavior. This acquisition is essentially a waiving of the white flag and pas…

Distribution was physical back in the day, your choice of cinema was dictated by location. Locking specific movies to specific cinemas was a detriment to the public for that reason. Does that matter when the alternative is via distribution by internet? Honestly, you can sub to netflix for one month, watch everything you want and then unsub, same with all the other services. Has there ever been a point in history wher…

Location isn’t the legal standard…it would essentially be like saying customers can watch all Studio A movies at Theater A and then watch all Studio B movies at Theater B.

Sure it’s more convenient online, competition being 1 click away, but antitrust still applies to online content creators/distribution businesses.

So it’s more important to ask if you wanted to watch Netflix created content can you watch it outside Netflix? It’s not a simple yes or no, black/white kind of analysis though. You also have to look at the whole of the industry and when you do you will begin to see how the sausage is made and the antitrust nastiness.

Say you want to create a movie/show you contact film company A, Director B, actor C. Turns out you can’t hire any of them because they have contracts with Netflix. New content creators can no longer compete or even enter the market to compete and new distributors will not have any content to distribute so they won’t be able to compete or enter the market.

Even if it results in more/cheaper content, which may or may not be something to brag about, ultimately a competition is harmed and lack of competition is what harms the consumer.