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

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

#191
post #6

Is the SEC and FTC ever going to do their job? They have failed us in the 21st century. Shareholder value over everything else. It would be nice for some regulation to attack all this rent seeking.

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…

> 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.

> If your prediction is that this will result in a welfare loss to consumers I would ask that you offer some evidence.

You are going to need to bring some evidence to support that notion, it's not on average people to prove that your merger isn't going to cause harm. Thankfully the Borkist era is very quickly coming to its end.

Consolidation should be blocked by default once companies reach a certain size. In order to proceed they should have to substantially prove that both consumers and labor are not going to be harmed by the merger. Any other arrangement results in speculative handwaving by lawyers and economists, and the supposed benefits almost never materialize, except for shareholders.

> Most of the hate Amazon gets on this site for being a “monopoly” is extremely wide of the mark.

What nonsense. Amazon has consistently used their platform anti-competitively to take over valuable product lines. They keep expanding into unrelated verticals in violation of federal law, and they are committing substantial, transnational labor abuses. Use whatever term you want to describe it.

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

#192
post #119

Earlier quoted context omitted.

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.

>Less competitive marketplaces harm consumers.

That's not a law.

There are a lot of examples of more competitive markets harming consumers - the trick is regulating the products and the relationship between producer and consumer.

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

#193
post #136

Earlier quoted context omitted.

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

See my other comment above.

It doesn't increase the amount of exclusive content, though, does it?

If this is your objection: "It is a bad thing for the consumer because it means more exclusive titles which is gives rise to a false market. It looks like consumers have a choice of platforms with content, but when that content is exclusive the consumer ends up having to pay for all the platforms to see the content they want to see. This in effect means more costs for the consumer and less choice."

Then wouldn't consolidating existing exclusive content mean consumers pay for less platforms?

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

#194
post #137

Earlier quoted context omitted.

> Large capital investment at meaningful scale is not part these companies' culture, or competencies. Am I missing something? The latest Amzn 10-Q shows $45B of “Purchases of property and equipment” $11B in lease principal payments in the past year. That’s on the $42B cash on hand and $26.9B net income. Cash flow and capital investment seems like the crank Amazon has been turning for 20 years?

I think he means that Amazon isn't really an acquirer. Other than Whole Foods, I think their next biggest acquisition is Twitch? That's only two total acquisitions over ~1 billion over Amazon's entire history. For what is currently the largest market cap on earth, that's pretty shocking.

Zappos and Zoox were also both $1 billion acquisitions by Amazon

Why only consider acquisitions over $1 billion though? They have quite a few $250 million+ acquisitions that were pretty big or key players in their respective niches.

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

#195
post #169
post #160

Earlier quoted context omitted.

At one level, it would be nice if all the subscription streaming services, a la carte content, and live TV could be accessed from a single subscription portal. But I suspect that most people wouldn't be willing to pay the $200 (or whatever) per month that such a service would probably cost. (And that's not an outlandish number; that's only about 2x what cable costs in a lot of places in the US.)

That's not the point that I'm making. You're absolutely right that nobody would ever pay $200 or whatever per month for such a service, but that's because nobody would ever consumer $200 worth of TV series on any given month. It's just not humanly feasible. The average human being consumes 2-3 TV shows at most on any given month. In the absolute worst case, that extends to 2-3 separate streaming subscriptions. The on…

> the future is an LRU cache that automatically unsubscribes you from a streaming service if you haven't watched a show on it in the last month

The future is rolling window two years subscription or something along those lines, because someone will inevitably build that LRU and it will be quite poplar for all seven weeks of operation.

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

#196

Earlier quoted context omitted.

Why shouldn't they control the copyright on entertainment media they own? Can I help myself to your property any way I see fit?

I have mixed feelings about this one because rightsholders essentially have a monopoly on their content. 5+ video streaming platforms is bad for consumers, and this exists because rightsholders are allowed to control their content. It doesn't happen in the music space because Spotify was there first, had everything, record labels had a stake, and record labels were desperate post-Napster, so the Warner Music App woul…

Spotify killed music piracy and Netflix did it for video content. Now that copyright holders got greedy and there’s 5+ services, none as good as Netflix, none have all the shows anyone wants people are turning back to piracy in a big way and services like plex and Emby make sharing easy, people even setup serves and sell access!

It’s their content and they can do what they want; but you can’t stop piracy

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

#197
post #137

Earlier quoted context omitted.

I think he means that Amazon isn't really an acquirer. Other than Whole Foods, I think their next biggest acquisition is Twitch? That's only two total acquisitions over ~1 billion over Amazon's entire history. For what is currently the largest market cap on earth, that's pretty shocking.

Zappos and Zoox were also both $1 billion acquisitions by Amazon Why only consider acquisitions over $1 billion though? They have quite a few $250 million+ acquisitions that were pretty big or key players in their respective niches.

Because a billion is a nice round number, and if you compare to other companies the same size, they've had a remarkably small number of acquisitions.

Google has had Youtube, DoubleClick, Android, Motorola, Nest, HTC, Nest, Looker, Fitbit, Waze... and that's just what I remember.

Facebook has had at least Instagram, WhatsApp and Oculus, but they've been around close to two decades less.

For a company of Amazon's scale, it's lack of acquisitions is relatively surprising.

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

#198
post #119

Earlier quoted context omitted.

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.

There is no marketplace for copyrighted content and there can't really ever be one unless you mandate compulsory licensing. If you want to watch Frozen then you have to buy from Disney or one of their approved vendors. You can't take your business elsewhere and so from a monopoly standpoint it doesn't matter who actually owns it. You might not like that Amazon in particular owns MGM because because it means that their content will likely only be available on Prime but nothing was stopping them from making an exclusive deal prior to the merger.

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

#199

Earlier quoted context omitted.

> That's not even a lot! Apple, Google & FB have $200bn, $140bn & $65bn respectively. Dividends don't seem to be a thing, and it's basically impossible to invest this much cash internally. These companies don't have factories to build, or any kind of hard capital investments to make. Apple arguably does have factories to build, given how utterly dependent on China it is.

This. Apple should be looking into buying a semiconductor company and building more fabs. Preferably US based. Maybe Micron or TI. Micron's market cap is ~90B. TI's is about ~170B, so probably Micron.

Honestly I would be sad to see vertical consolidation like that. But given all the hype around M1 and the translation to $$$, it wouldn't surprise me.

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

#200

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…

> That's not even a lot! Apple, Google & FB have $200bn, $140bn & $65bn respectively. Dividends don't seem to be a thing, and it's basically impossible to invest this much cash internally. These companies don't have factories to build, or any kind of hard capital investments to make. Apple arguably does have factories to build, given how utterly dependent on China it is.

Perhaps, and there seems to be more movement in the direction of late. Makes sense, considering how much trouble they've had "putting money to work."

That said, Apple have a hell of job turning $200bn into factories.

The scale of money, currently... is quite something to live up to.

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