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: Last week, Sony Corp humbled the world’s largest media company, Time Warner, when it acquired Hollywood studio MGM. Time Warner withdrew its cash offer of $2.6 billion once the Sony-led consortium held out $3 billion. For a total consideration of $5 billion, Sony has thus bought about 4,100 movie titles and 10,000 TV episodes. Combine these with the titles it already holds, and you have the world’s largest record company now owning the world’s largest film library.
MGM had been on the look-out for buyers since about two years now, about the time DVD players began to notch up scorching sales in US. For, it had realised its huge cache of films — including such classics as the Pink Panther, Bond and Rocky series — made it a hot pick for any media company. But Sony’s actions indicate that it, in fact, nurtures grander ambitions of exploiting synergies between the media and electronics industries.
Note that its newest business partner is Comcast Corp, US’ largest cable TV operator, which will distribute Sony’s massive library to American audiences via its video-on-demand service. In addition, those 7,600 titles are expected to come handy in Sony’s movie-download-onto-PC business. Plus, Sony plans to diversify into TVs which will allow movie downloads and, with Comcast again, will start new cable channels. Sony is also developing Blu-ray as a standard for DVD viewing. If the company can link its technology to a pipeline of DVD products from its film library, Blu-ray could well become the VHS of this decade.
Of course, the plethora of if’s and when’s don’t inspire confidence among some analysts. Especially as Sony’s flagship electronics division — accounting for 2/3rds of its total sales — is struggling. What’s more, comparisons with the doomed AOL-Time Warner mega-merger are beginning to crop up. Then, too, there was much talk of synergy between ‘old media’ assets and powerful tools of the internet age. As also the vision to market a vast movie library via broadband applications. But technology and infrastructure constraints left an overvalued internet upstart and a media giant badly bruised. Will Sony-MGM exorcise the ghost of AOL-Time Warner?
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