”Amazon is in the driver’s seat. And MGM just goes along for the ride,“ entertainment attorney Bryan Sullivan says
While MGM top film exec Michael De Luca and TV chief Mark Burnett are for now part of the interim leadership structure at Amazon Studios, insiders say they face an uphill battle to adapt to the tech giant’s corporate culture and retain a role at the streaming-oriented company in the future.
“This is not a merger, this is a straight up acquisition,” Bryan Sullivan, a partner at Early Sullivan Wright Gizer & McRae who focuses on entertainment and investment, told TheWrap. “Amazon is in the driver’s seat. And MGM just goes along for the ride.”
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And executives at the studio being acquired have good reason to feel anxious. “When studios acquire other studios, it eventually creates a great degree of upheaval for people and content despite the buyers’ clichéd statements that it intends to leave the acquired company alone,” Gene Del Vecchio, an adjunct professor of marketing at USC’s Marshall School of Business said. “And so we can expect some jockeying for position in both the executive suite and the slate in the near future.”
Amazon had no comment for this story. MGM didn’t respond to TheWrap’s request for comment.
As the company revealed at Friday’s town hall meeting, De Luca, Burnett and COO Christopher Brearton will all report to Amazon Studios and Prime Video SVP Mike Hopkins, while Amazon Studios head Jennifer Salke will continue to report to Hopkins separately.
That interim leadership should be seen as just that: temporary. As several Hollywood insiders pointed out, the first town hall after a merger or acquisition is often meant to calm employees about changes that will affect their jobs. Amazon saying that MGM’s top execs will be part of the leadership structure during this transition phase meant to dampen anxiety.
The interim executive lineup means less to Amazon stockholders than it does to the Hollywood creative community. As one analyst who asked not to be named told TheWrap, many in Hollywood may be confused as to whether a project is best pitched to Salke, or to one of the MGM execs.
The MGM acquisition — and the subsequent executive shuffle — led to a slight uptick in Amazon’s stock price, from $3,052 to $3,144 on Friday. Even Amazon’s announcement of the $8.45 billion acquisition last May didn’t cause much of a ripple in the stock price, which according to The Motley Fool and other sources nudged up only .2% following the news.
At the time, analysts speculated that stockholders were concerned that $8.45 billion was too much to spend, even for Amazon — currently valued at a staggering $1.6 trillion — and might not do much to further Amazon’s goal of luring new Amazon Prime subscribers who might be just as interested in online shopping as quality streamed entertainment.
Still, for those focused on Amazon Studios and its future, the new executive structure is of major concern. While the greenlight power still rests with the current Amazon team, the tech behemoth will want to take advantage of everything about its new acquisition from MGM’s rich library of 4,000 films and 17,000 TV episodes to the executive team responsible for developing new content.
De Luca, who took over as chairman of MGM’s Motion Picture Group in January 2020, has been defined by his relationships with talent, paying a premium to land projects from Ridley Scott and Paul Thomas Anderson for “House of Gucci” and “Licorice Pizza,” respectively — the latter of which landed a Best Picture nomination and acclaim, if not box office returns.
But one producer predicts De Luca may struggle to adapt to Amazon and Salke’s more data-driven “rigorous process” of setting up content deals than his more traditional talent-focused approach. “Can these people’s different approaches work together? Mike De Luca is very talent-friendly, while big tech throws money at things,” Stephen Galloway, dean of Chapman University’s Dodge Film School, told TheWrap. “Amazon has been moving beyond those indie movies that were made pre-Salke. She wants big. So you have to ask whether De Luca has a future there.”
That said, De Luca is a film guy who could help shepherd some of MGM’s existing franchises, including “Creed,” “Tomb Raider” and “Legally Blonde” that already have sequels in the works. And he could complement the TV expertise of Salke, a former NBC entertainment chief who has overseen such Prime originals as “Jack Ryan,” “The Boys,” “Reacher” and “The Underground Railroad” since she joined the streamer in 2018.
Burnett, on the other hand, whose contract with MGM runs through this year, has a track record with “The Apprentice” and “The Voice” at NBC among others, but his unscripted hits at MGM have slowed in recent years since he was named chairman of the TV group in 2018. “The Handmaid’s Tale” and “Fargo” have become prestige hits for the studio, but there have been reports that he’s butted heads with other MGM execs, and most don’t expect him to stick at Amazon.
“Jen is really liked by her team, and Mark has a lot of detractors,” one veteran agent who asked not to be named told TheWrap.
“I would be surprised if Mark Burnett sticks around for a long time — very surprised,” Galloway said.
Until a permanent leadership structure at Amazon emerges, questions will linger about how the cultures of MGM and Amazon will mesh — and whether MGM will maintain any autonomy as its own division with greenlight authority within certain budget parameters. There are many models for such an approach, including how the indie division Searchlight operates within Disney.
But since MGM has made everything from megabudget tentpoles like the James Bond films to more art-house fare like “Licorice Pizza,” it may be more challenging to draw clear distinctions between MGM and Amazon Studios. “How do you delineate who makes what movies?” the producer said, adding that without a specific lane for either group “that’s usually when the drama happens.”
One dividing line could be in sheer dollars. Last year, Amazon spent a combined $13 billion on content between video and music, dwarfing even the hefty $8.5 billion it paid for MGM and its packed library of filmed material. That doesn’t even include the James Bond franchise, which Amazon will still only have a 50% stake in due to the unique nature of the Bond rights with EON Productions.
“Take away the library of some 17,000 episodes and 4,000 movies and it’s a small company that doesn’t make that much. Sure, they had ‘Handmaids Tale’ and a few movie hits, but the real future lies in developing their IP a whole lot better than the current leadership has done,” Galloway said. “They must be looking at the IP and saying, ‘What do we have here that we can build, and who can build it?'”