Michael De Luca may be the big winner from Wednesday’s blockbuster news that Amazon will purchase Metro-Goldwyn-Mayer for $8.45 billion.
Though insiders caution that no decisions have been made, there is speculation around Hollywood that De Luca will play a major role in helping the e-commerce giant monetize its new library of 4,000 MGM film titles. It’s an arsenal of intellectual property that includes “Robocop,” “The Silence of the Lambs,” “Rocky,” and, of course, James Bond. That list of heavy-hitting films and franchises is one that De Luca, who has held top jobs at New Line and Sony, may be best positioned to exploit.
As a producer, De Luca has shown a deft hand at juggling prestige fare such as “The Social Network” and “Captain Phillips” along with more broadly commercial offerings such as the “Fifty Shades of Grey” films — a sweet spot Amazon has been trying to reach in recent years.
Under Amazon Studios chief Jennifer Salke, the unit has moved away from indie features like “Manchester by the Sea” and “Weiner-Dog” to more populist movies such as the recently released “Borat 2,” the Michael B. Jordan thriller “Without Remorse” and “Coming 2 America.” Although it has had some success with these movies, they are primarily acquisitions, which landed at Amazon in the height of the pandemic when companies like Paramount and Universal couldn’t secure wide theatrical releases for their films. What Amazon has been less successful at doing is producing its own movies in-house, though the studio does have a handful of promising projects such as Aaron Sorkin’s “Being the Ricardos” and George Clooney’s “The Tender Bar” in the works.
MGM is expected to operate as a standalone brand within the Amazon portfolio, similar to how the company has handled previous acquisitions such as Wondery or Twitch. Some insiders believe that MGM will become the primary funnel for film content, leaving Amazon Studios’s film division, which is run by Julie Rapaport and Matt Newman, to handle smaller-scale, straight-to-streaming content. Neither Rapaport nor Newman have De Luca’s deep relationships with the creative community or track record of producing hits.
De Luca is 16 months into a three-year contract, sources said. It’s possible that he will take a payout and move on, but he was involved in negotiations to sell the company, which could indicate he’d like to play a larger role. If he does, he will probably bring along Pamela Abdy, the former Makeready and New Regency executive, who he hired in 2020 to run MGM’s motion picture division.
Insiders familiar with both MGM and Amazon speculated that De Luca could foreseeably be named head of original films across both Amazon Studios and MGM — though they struggled to imagine De Luca reporting to Salke or sharing a title. Salke was said to be involved in the deal from the beginning, according to two sources, who added she enjoys a close relationship with Bond rights holder Barbara Broccoli. She is also seen as close counsel to Jeff Blackburn, Amazon’s senior vice president of global media and entertainment, and outgoing CEO Jeff Bezos.
Amazon Studios and MGM declined to comment on this story. Insiders at both companies said discussions around structure have not yet begun, and the deal will take months to pass regulators.
“Mike could easily go back to producing, make more money, and wait for something big to open up,” said one top media executive. “But he’s a ‘get,’ and this could be a big opportunity for him.”
So far, most Amazon employees are left with more questions than answers about the deal. At a town hall on Wednesday with all of Amazon Studios’ employees, staffers were informed that they should operate as if it were “business as usual.” The 20-minute presentation was led by Amazon Studios Chief Operating Officer Albert Cheng, Salke, and Mike Hopkins, the senior vice president of Prime Video and Amazon Studios who negotiated much of the deal. After showing a sizzle reel full of MGM hits like “Rocky” and “The Silence of the Lambs,” Salke and Hopkins talked up the pact, saying it represented “another big step [by Amazon] into the content space.” They added that roles for the MGM executives have not been decided. An MGM town hall the same day had a similar tone.
Both De Luca and Abdy are credited with nailing down deals for some high-profile upcoming films, including Paul Thomas Anderson’s next project, a Thomas Kail-directed remake of “Fiddler on the Roof,” and “Project Hail Mary,” an adaptation of “Martian” author Andy Weir’s novel of the same name that’s set to star Ryan Gosling and be directed by Phil Lord and Chris Miller.
Those upcoming titles also raise important questions about theatrical distribution. MGM’s films are put out through United Artists Releasing, a joint venture formed in 2019 with Megan Ellison’s Annapurna Pictures.
While the JV was set to expire in 2021, Variety reported last month that MGM extended their participation for a full year in the interest of simplicity as it sought this exact billion-dollar sale. Though insiders at the company, led by CEO Pam Kunath, are said to be fearful for their jobs, many in the industry expect UAR to ride out 2021 and release films like ‘House of Gucci” and “No Time to Die” theatrically. It is Amazon’s interest in owning a distribution engine going forward that will determine their fate. At least some MGM films will bow in cinemas even after the deal closes. Broccoli and her half-brother Michael G. Wilson released a statement saying that they “…are committed to continuing to make James Bond films for the worldwide theatrical audience,” a sign that 007 won’t be premiering on Amazon Prime anytime soon.
As it stands, MGM owns a two-thirds stake in United Artists Releasing, sources said, a position previously held by Annapurna (which has not released a movie in nearly two years). The company was structured as a profit driver, as overhead costs for staff and P&A are covered by distribution fees and the profits are circulated back into UAR.
“UAR could easily be dissolved in 2022,” said one well-placed individual, “but look at the staff over there and MGM. Apples to apples, they’re better marketers.”
The source cast doubts on the effectiveness of Amazon’s theatrical marketing team, which recently launched expensive campaigns for “Borat 2” and “Coming 2 America.” Executives like MGM’s Stephen Bruno (a Netflix alum) and UAR’s Gerry Rich are seen as savvier than the streaming giant’s existing team. Erik Lomis, UAR’s head of distribution and an industry veteran with a stint at the Weinstein Company, could prove to be of great use to Amazon should they invest in wide global releases.
United Artists Releasing declined to comment on the matter.