How Amazon should respond to scrutiny over MGM acquisition

The $8.45 billion deal still needs antitrust approval.

Photo credit: Getty Images
Photo credit: Getty Images

SEATTLE: For Amazon’s acquisition of Metro-Goldwyn-Mayer to pass antitrust review, Amazon will need to demonstrate that a strong, competitive landscape -- with companies such as Netflix, Disney, Hulu, Comcast and Paramount -- will continue to exist for streaming entertainment, according PR experts. 

If the $8.45 billion deal goes through, it will strengthen Amazon Studios, the company’s entertainment arm. It is already the number two paid streaming service, following Netflix, and the acquisition will add more than 4,000 movies and 17,000 TV shows to its library.

The essential element of antitrust reviews is whether the combined company will make the marketplace less competitive and negatively impact consumers, explained Proof Point Communications CEO Anne Marie Squeo.

“From a PR perspective, they will almost certainly receive a lot of scrutiny just because of how large they already are,” said Squeo. “[They’ll] need to paint themselves as part of a landscape that increases choice and access for content creators and consumers alike.”

Formerly the chief communications and brand officer at Xerox, Squeo also worked in comms at IBM, Netflix, Lockheed Martin and Raytheon. Previously, she was the lead antitrust reporter for Bloomberg.

“The big question with Amazon is: How will this all play out?” said Nicholas Ashooh, senior director of corporate and executive communications at APCO Worldwide. “It’s a super convergence of retail and entertainment. Amazon is connected, virtually to everybody.”

The company’s massive size and power has attracted concern in Washington, DC. Rep. Ken Buck (R-CO), who’s on the House antitrust subcommittee, already noted that the acquisition requires greater scrutiny, according to The New York Times.

Rep. David Cicilline (D-RI), who chairs the House antitrust subcommittee, tweeted, “Amazon’s proposed purchase of MGM reinforces what we already know — they are laser-focused on expanding and entrenching their monopoly power. That’s bad for workers, consumers, and small businesses.”

Senator Amy Klobuchar (D-MN), who heads the Senate antitrust subcommittee, has called for a Justice Department investigation, prior to the deal’s closing.

However, Yahoo Finance reported some experts anticipate that the deal will pass antitrust review, under current laws. This included analyst Jennifer Rie at Bloomberg Intelligence, who compared the merger to Amazon’s $13.7 billion acquisition of Whole Foods in 2017.

Bloomberg reported that the FTC and attorneys general in several states, including Massachusetts, Pennsylvania, California, New York and Washington state, are already investigating Amazon for potential antitrust violations.

In addition to the antitrust concerns, mergers and acquisitions can create job redundancies, which involve corporate communications.

But Ashooh said it’s a different paradigm with Amazon, which is not another entertainment company looking to buy another business’ library.

“They’ve got so much capacity to build and invest,” he pointed out. “They are a different kind of player. I’m not sure the regular assumptions of slashing jobs to maximize profits would apply here.”

Separately, Amazon CEO Jeff Bezos announced that he will step down on July 5, with Andy Jassy assuming his role.

Amazon reported its Q1 2021 financial results indicated operating cash flow increased 69% to $67.2 billion for the past 12 months, compared to $39.7 billion for the same time period last year. In Q1, its net income increased to $8.1 billion compared with net income of $2.5 billion in Q1 2020.

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