Amazon Roars….


At one time, Metro-Goldwyn-Mayer studios boasted of having ″more stars than there are in the heavens″ back when Hollywood was loud and proud, and Leo the MGM Lion reigned as king of the movie universe. This week the history that is MGM was sold to a purveyor of a digital five and dime store.

In 1975, a movie was released by United Artists entitled “Rollerball”. The premise of the movie is that in the extremely near future, corporations will assume the role of government. In this futuristic society, the violent game of Rollerball is used to control the populace by demonstrating the futility of individuality. However, one player, Jonathan E., rises to the top, fights for his personal freedom, and threatens corporate control.

As fate would have it, United Artists’ parent organization is MGM.

There are many issues that are arising over this transaction, some legal like a potential antitrust test, given the circus that is emerging in the Senate, that is increasingly unlikely. This will make Amy Klobuchar’s arm-waving over the lack of enforceable antitrust legislation a charade. It will place a vast library and the beloved Bond franchise with a company that has little focus on theatrical distribution. The acquisitions bullseye on the backs of Sony and Lionsgate shall be painted a deeper red. For me, the most poignant part of this transaction is the simple fact that we all are being forced to come to the sad conclusion that the studio system that gave rise to the business known as the movies has come to an end.

Amazon has been waiting in the weeds. They have watched the machinations of Disney, Netflix, and others. While sitting in the weeds they have quietly produced the streaming series of “The Lord Of The Rings” in New Zealand and other marquee products. At a given moment and at the most opportune time they will unleash the MGM library and made for streaming titles like “The Lord Of Rings” and begin their own campaign for streaming supremacy. It is most likely that Amazon will win.

Behind the scenes, they have built their own expansive digital network which now covers the globe. They have developed streaming appliances and they have filled up Amazon Prime with tens of thousands of independent movie titles, which will soon find themselves crowded out by the MGM library. By the way, the library contains about 4000 titles and thousands of hours of television series. In a literal sense, this is a tsunami that is going to change the landscape of this business.

While Washington is expressing deep concern, there is little evidence that there is an organizational dynamic to counter these corporate moves. There is a beginning of a sense of powerlessness and credibility in Washington to even address these issues. The number of companies dominating the media and entertainment landscape has decreased from roughly 50 in 1983 to less than a dozen by the late 1990s. Further consolidation as of today is probably 4 companies controlling the majority of our media. Since 2014 according to a Deloitte report, there has been more than $700 billion worth of media acquisitions and mergers.

Industries controlled by a couple of dominating corporations tend to be less competitive and in my opinion leads to a deep erosion of free enterprise and eliminates choice, the foundation of free enterprise. I personally feel that the centralization of economic power is a real danger to the balance within society. The acquisition of MGM by Amazon is raising the specter of “Big Tech” within Congress.

“Big Tech companies with extensive monopoly power, such as Amazon, have continued to expand through acquisitions of smaller competitors, such as MGM. The FTC has failed to strongly enforce antitrust laws or hold offenders accountable for the past decade. This hurts competition and consumers, Republican Rep. Ken Buck of Colorado told Time Magazine, “It’s critically important that our laws prevent companies like Amazon from engaging in anticompetitive behavior.” Buck went on to say that he intended to introduce legislation that “brings stricter scrutiny on mergers from monopoly companies.”

Unfortunately, while the Representative is spot on, the argument is clouded by eroding partisan politics and his motivation will probably be categorized as anger at Jeff Bezos, the owner of the Washington Post newspaper. Last week, the Washington D.C. Attorney General filed an antitrust complaint against Amazon, making the allegation that the company illegally created a monopoly by preventing third-party sellers from selling their products for the lowest prices other than on Amazon thus preventing competition and creating a totally different economy for other retail outlets. By the way, Walmart does the same thing.

Meanwhile back on The Hill, those fun folks on the Antitrust, Commercial, and Administrative Law Subcommittee of the House Judiciary released a voluminous report rallying against the uncontrolled growth of major tech companies and the risk that this growth represents. This report puts forward the conclusion that “Amazon expanded its market power by avoiding taxes, extracting state subsidies, and engaging in anticompetitive conduct tactics that have given the company an unfair advantage over actual and potential competitors.”

In typical Washington style, Republicans are using terms like Left-leaning or far-left to define the perpetrators of this massive media consolidation. I often wonder if this type of useless painting of propaganda is done so just to torpedo political action. There is far too much obstructionism in government today and it has become a barrier to right and wrong.

Washington aside, I believe this consolidation gives rise to mediocrity and a lack of choice for the consumer. For filmmakers, there is less opportunity to express a diverse voice, for distributions it crowds out a marketplace, for theaters it shifts all focus to streaming and lets a 120-year industry die on the vine, and for the consumer it removes choice.

This has been a steady march towards oblivion. The pretense of the studio system is falling away, the glamour of the movies is deeply diluted by streaming. As the last Oscar telecast betrays, the public and Hollywood are so detached from each other that they have become total strangers. A beloved former friend that has changed so much that you will not even acknowledge each other while walking down the street.

Meanwhile, audiences across America look longingly at a marquee looking for a simple story that will appeal to them and speak of the former glory that was the movies.

As I write this, a few packages have arrived at my door. Books to read published by Amazon, Amazon Pantry has delivered supplies for a Memorial Day BBQ, and my son’s order of the latest Nike sneaker has also arrived. Tonight I shall sit down and watch a movie streamed via the pipes controlled by Amazon and the content owned by Amazon. As I lay down to sleep, I shall cover myself with the duvet my wife purchased on Amazon.

At the conclusion of the movie, “Rollerball” the lead character Jonathan E. played by James Caan, defies the corporate overlords and refuses to due to their bidding. He skates around the Rollerball track in silent victory and defiance of his economic masters. The coaches and fans of both teams begin to slowly chant his name, then louder and louder as he skates faster and faster. The corporate head, played by John Houseman exits the arena quickly, possibly fearing a riot as the chant of “Jonathan! Jonathan! Jonathan!” becomes a roar. For a minute, a probably very brief minute, the individual has triumphed over the corporation.

Only in the movies, Rollerball.