Bezos the Great and Powerful

Beyond the dangers of corporate consolidation, Amazon’s acquisition of MGM has exposed an American economy that’s mostly make-believe.

Jacob Bacharach

Amazon CEO Jeff Bezos speaks at an event hosted by the Air Force Association in September 2018. Alex Wong / Getty Images

In Amazon Unbound: Jeff Bezos and the Invention of a Global Empire, Bloomberg editor and author Brad Stone reveals the 12-point list of rules that Amazon CEO Jeff Bezos laid out for executives at his film and production company, Amazon Studios. They are entertainingly banal: a heroic protagonist, a compelling antagonist, secret abilities, moral choices, cliffhangers. 

George Lucas cribbed this crap from the likes of Joseph Campbell 40 years ago when it was pointed out that Lucas had written a hero’s journey and had to pretend that had been his intention all along. But while a kook and (later) a bit of a tyrant, the Star Wars director nevertheless worked with a real creative spark in producing a genuine piece of popular art. By the time Lucasfilm sold its franchise to Disney, there was a collective sense of an éminence grise — that Lucas was justified in cashing out.

The same cannot be said for the sale of MGM Studios to Amazon for the tidy sum of $8.45 billion, in part because MGM no longer exists as a movie studio in any conventional sense (and hasn’t since the late 1960s). What an irony, that one of America’s greatest factories of make-believe is itself mostly made up. The demise of Hollywood’s famed studio system,” in which vertically integrated movie studios owned everything from the actors (via long-term contracts) to the backlots where movies were filmed to the theaters in which they were screened, had left the once-dominant MGM a mere shadow of its former self. By 1969, MGM’s assets were worth more than its stock, and MGM fell prey to the early corporate raider” Kirk Kerkorian, who bought it cheap, removed existing management and promptly began selling the business for its parts. 

It’s easy to dismiss Amazon’s acquisition as the latest in a series of warning signs about corporate consolidation and creeping monopolism. (Amazon’s gross revenues in 2019 were greater than the gross domestic product of Chile and nearly equal to that of South Africa.) But the sale of MGM points to something darker still: that capitalism has already hollowed out the very institutions Bezos is now adding to his portfolio. 

Before its sale to Amazon, MGM was a victim of what we would now call private equity” — a more anodyne term than corporate raider, if no less destructive or predatory. (Private equity has already destroyed such classic American businesses as Sears and Toys R” Us. And despite what you may have heard, several of these were still profitable.)

Over more than three decades of ownership,” Kerkorian in fact bought and sold MGM a total of three times, auctioning off much of its original library of titles while acquiring new ones, and loading up the business with ever more debt in the process. The company eventually filed for bankruptcy in 2010, and it emerged from Chapter 11 under the controlling ownership of its own largest creditors. MGM’s pending sale to Amazon will ultimately pay these creditors out for the billions of dollars in debt with which they themselves saddled the zombie studio.

For its part, Amazon is under no illusions that it is purchasing what you or I might consider a production company. As Bezos himself explained at an annual shareholders’ meeting, MGM has a vast and deep catalog of much beloved intellectual property, and … we can reimagine and develop that IP for the 21st century.”

The depth of MGM’s catalog of much beloved intellectual property” is rather questionable, although it does own James Bond. But while the penultimate entry in the series, Skyfall, raked in over a billion dollars globally, its follow-up, Spectre, grossed only” $879 million — a worrying sign in a landscape where anything less than $1 billion is a disappointment for a summer tentpole. Unlike Star Wars and the Marvel Cinematic Universe, Bond doesn’t sell toys, and his video game presence is anemic at best. At this rate, it will take perhaps 25 – 30 more Bond installments over the next 90 years for Amazon to recoup its initial investment. Daniel Craig will be 143 years old in 2111.

Along with 007, MGM produces a handful of popular reality shows, including The Voice, Survivor and the sprawling Real Housewives empire. These are all low-rent productions, but they currently appear on competing channels and platforms, and if $9 billion is far too much to pay for the programs themselves, it may be just the right price for Amazon to deny them to its entertainment rivals. The multinational currently sits on perhaps $50 billion in cash reserves and will hardly notice the expense. 

Like so much of the current American economy, Amazon’s latest purchase does not actually have to make any kind of business sense. Amazon is the world’s fourth-largest company by market capitalization and eighth or ninth in terms of gross revenue, depending on how one counts China’s Sinopec oil and gas conglomerate. (Interestingly, Amazon is 30% smaller than stodgy old Walmart, which remains the world’s largest company by revenue by far.) Amazon is less stratospheric in terms of actual profitability — closer to such fuddy-duddy concerns as Toyota, Samsung, Shell and Volkswagen, and far below companies like Saudi Aramco, Berkshire Hathaway, Apple, several Chinese banks and Microsoft (yes, Microsoft). But profitability is less of a concern in this age of infinite growth; Amazon is incentivized to buy a studio like MGM simply because it can.

Bezos likely sees himself as the protagonist in his own heroic journey. For all his grand vision, however, his company’s size feels almost accidental — a symptom of a broken American regulatory state and an economy’s mania for acquisition. We’re not in Kansas anymore, Toto, and we’re likely never going back. MGM sold off Dorothy’s ruby red slippers in 1970.

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Jacob Bacharach is a novelist and critic. He lives in Pittsburgh, Pa. and Blacksburg, Va.

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