The tech giants stormed Hollywood this past week: Amazon.com Inc. announced its plan to buy the storied MGM studio for nearly $8.5 billion, including debt.
The story of outsiders trying to take on Hollywood is one with many sequels. Since the mid-20th century, companies in sectors as far-flung as soft drinks and oil fields have come to Los Angeles hoping to strike it rich in the film business. Long-gone players have included Coca-Cola Co., Gulf & Western and General Electric Co.
Nearly all the outsiders have ended up slinking out of town, defeated. There’s a reason producers often refer to outside financing as “dumb money.”
Look at the owners of studios through time, though, and larger corporate trends emerge, from the postwar supersizing of industrial conglomerates to the rise of Japanese players in the 1980s and ’90s. When Sony Group Corp. bought Columbia Pictures in 1989, the cover of Newsweek declared JAPAN INVADES HOLLYWOOD.” Very little at what is now Sony Pictures changed, outside of the installation of a sushi bar, but similar concerns were raised when Chinese investment started flooding into Hollywood around 2015.
In the past 20 years, cable giants and telecom companies have plowed billions into the business, in an effort to capitalize on the shift to smaller screens and establish themselves as creative forces of their own. Few have succeeded. Earlier this month, AT&T became the latest to step back from the business, unwinding much of the foray it had made into entertainment with its $80 billion-plus acquisition of WarnerMedia in 2018. The move lowers AT&T’s debt load and returns the company’s focus to its core telecom business.