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Lucio Tan’s grandson appointed as PAL Holdings vice president

PAL Holdings, Inc. said Thursday that its board of directors has approved the appointment of Lucio C. Tan III, grandson of Chairman Lucio C. Tan, as vice-president of the company.

“Please be advised that at the meeting of the board of directors held on May 26, 2021, the board approved the appointment of Mr. Lucio C. Tan III as vice-president of PAL Holdings, Inc.,” the listed operator of the Philippine Airlines said in a disclosure to the stock exchange.

The appointment of the chairman’s grandson and son of the late Lucio “Bong” K. Tan, Jr. comes amid reports of bankruptcy protection plans.

The younger Tan “has served as director of the corporation (MacroAsia Corp.) since December 2019,” MacroAsia said on its website.

“Since December 2019, Mr. Tan has also served on the board of directors of the following corporations: LT Group, Inc., PAL Holdings, Inc., Philippine Airlines, PAL Express, Lufthansa Technik Philippines, Inc., MacroAsia Catering Services, Inc., MacroAsia SATS Inflight Services Corp., MacroAsia Airport Services Corp., MacroAsia Properties Development Corp., Belton Communities, Inc., Eton City, Inc. and First Homes, Inc. He is currently the President and chief executive officer of Tanduay Distillers, Inc.,” it added.

PAL said on May 11 that it was working on a “comprehensive restructuring plan that will enable PAL to emerge financially stronger from the current global crisis.”

In November last year, the Finance department said the flag carrier was planning to seek court protection from creditors as it was working on a debt restructuring plan.

PAL has yet to release its latest annual earnings report and its report for the first quarter of 2021.

To recall, PAL’s total revenues for the first nine months of 2020 stood at P45.29 billion, down 61.6% from the previous year’s P117.85 billion.

Its net loss to parent equity holders hit P28.85 billion, or more than three times the P8.49 billion recorded in 2019. — Arjay L. Balinbin

Industry, business groups push for easing of Bank Secrecy Law

SEVERAL INDUSTRY and business groups have expressed their support for the enactment of a bill that will ease the secrecy of bank deposits as this will help the Bangko Sentral ng Pilipinas (BSP) fulfill its mandate to keep the banking sector sound.

In a joint statement led by the Financial Executives Institute of the Philippines (FINEX), groups in the banking industry as well as local and foreign business chambers signified their “full support” for the signing of House Bill 8991, which seeks to amend Republic Act (RA) No. 1405 or the Bank Deposit Secrecy Law.

The BSP has likewise urged Congress to certify the bill as urgent. The House Committee on Banks and Financial Intermediaries in February approved the bill.

The bill expands the supervisory powers of the BSP by allowing it to look into the deposit accounts of bank stockholders, owners, directors, officers or employees in the course of its investigation into closed banks, but only if there is reasonable grounds for fraud, serious irregularity or unlawful activity.

This will be applicable to deposits as defined by the Philippine Deposit Insurance Corp., as well as foreign currency deposits of banks operating in the Philippines and offshore branches of local lenders.

“We consider the urgent passage of the Bank Deposits Secrecy Bill of paramount importance to address the unintended consequences of bank secrecy laws in the country,” the groups said in the joint statement.

“The global trend is to relax bank deposits secrecy laws across jurisdictions to effectively combat both domestic and global tax evasion, money laundering and other financial crimes and comply with international standards on transparency. The Philippines has lagged behind this worldwide trend. Strict deposit secrecy in the country continues to make the Philippines a haven for tax evasion, a protected channel for international money laundering flows, and other illegal financial transactions,” they said.

The groups said existing bank secrecy laws have limited the BSP’s powers and, in turn, may threaten the stability of the banking system.

“Studies show that existing bank secrecy laws in the Philippines are more constraining for prudential supervision than similar laws in other jurisdictions… Recently, Lebanon passed two laws easing bank secrecy laws, leaving the Philippines as the only remaining country with bank deposit secrecy laws so stringent that they impede prudential supervision,” they said.

The groups noted that the bill “will simply restore the authority to have access to bank deposit accounts that the Bangko Sentral had prior to the passage of RA 7653 in 1993” and provides enough safeguards against abuse as only the central bank can look into suspicious accounts “under strict guidelines.”

“Indeed, the proposed Bank Deposits Secrecy Bill has wide-reaching implications. The bill will not only strengthen prudential supervision and allow BSP to effectively fulfill its mandate of maintaining stability of the banking system but also ensure compliance with the international standards on transparency and good governance which will preserve and fortify the public and the global community’s trust in Philippine the banking system,” they said.

Aside from FINEX, the groups that signed the statement were: American Chamber of Commerce of the Philippines; Australia-New Zealand Chamber of Commerce Philippines; Bankers Association of the Philippines; Cebu Business Club; Cebu Leads Foundation; Chamber Of Thrift Banks; CIBI Foundation, Inc.; European Chamber of Commerce of the Philippines; Fintech Alliance PH; Foundation for Economic Freedom; French Chamber of Commerce and Industry in the Philippines; and Fund Managers Association of the Philippines.

Also among the groups were Guild of Real Estate Entrepreneurs and Professionals, Inc.; Institute of Corporate Directors; Intellectual Property Association of the Philippines; Japanese Chamber of Commerce and Industry of the Philippines; Licensing Executives Society Philippines; Makati Business Club; Management Association of the Philippines; Philippine Center for Entrepreneurship or Go Negosyo; Philippine Council of Associations and Association Executives; Philippine Life Insurance Association, Inc.; Shareholders’ Association of the Philippines; Tax Management Association of the Philippines; and Women’s Business Council Philippines.

Cebu Landmasters eyes further expansion through 25 projects

CEBULANDMASTERS.COM

CEBU Landmasters, Inc.’s (CLI) 25 projects for the year are expected to expand the company’s footprint to other key cities in the Visayas-Mindanao (Vis-Min) region, the company said on Thursday.

“Our 2021 projects will expand our Vis-Min footprint to cities like Ormoc, Bohol, Bacolod, Dumaguete, Iloilo and other key cities in the region while further strengthening our market share in Cebu and Cagayan de Oro where we have established a strong presence,” Jose R. Soberano III, chairman, president, and chief executive officer of CLI, said in a statement.

Around 15 of these projects, valued at P19 billion altogether, are under the company’s economic and mid-market residential segments.

CLI also said it is confident it can complete its ongoing residential development projects as well as 33 more currently in the works, including mixed-use developments, hotels, and townships. The majority of these are expected to mature for revenue recognition before yearend.

The company said during its annual stockholders’ meeting that it launched two new developments in Cebu during the first quarter, and it currently has 12 projects under construction and 22 have been completed in the area.

“Cebu remains to be our biggest market being our home base with 60% of our projects in Cebu,” Chief Operating Officer Jose Franco B. Soberano said. “But we’re very proud to have diversified into 15 other key cities in the last 10 years.”

This year, the company earmarked P12 billion for capital expenditures (capex), with P1.65 billion already spent during the January-to-March period.

CLI entered a P3-billion note facility agreement earlier in the month with BPI Investment Management, Inc. to partially fund its capex, which will be used for the development of its new projects.

On Thursday, shares of CLI at the stock market went up by 2.02% to close at P7.06 each. — Keren Concepcion G. Valmonte

Six OPM artists come together for a virtual concert

ALPAS (from left to right): Kitchie Nadal, Aia de Leon, Barbie Almalbis, Johnoy Danao, Ebe Dancel, and Bullet Dumas

THE ONGOING coronavirus disease 2019 (COVID-19) pandemic and quarantines have kept musicians cooped up in their homes, unable to perform for a live audience. While they have kept busy learning how to record, produce, and continue writing new music at home, the online community platform Kumu has made it possible for alternative/pop-rock/folk singers Ebe Dancel, Johnoy Danao, Bullet Dumas, Barbie Almalbis, Aia de Leon, and Kitchie Nadal to get together for a virtual concert.

To keep the live music scene alive while public life is on lockdown, GNN Entertainment and Kumu are presenting a digital concert called ALPAS (which means “breaking free”) on June 5, 6 p.m. (Philippine time).

“Music feels more essential than usual in the time of pandemic. It’s quite challenging to find a sustainable workaround to help artists connect with their fans and implement welcoming developments in the virtual concert space. ALPAS is our way to support the live music scene as we transition into the new normal,” Kumu Live Events Manager Lorraine Alelis said in a statement.

ALPAS marks the first time that the six artists will be co-headlining a show in a “familiar music venue” after having performed as solo acts or members of a band. The artists will be performing song of their biggest hits such as “Burnout,” “Sundo,” “Tugtog,” “Huwag na Huwag Mong Sasabihin,” “Tabing Ilog,” and “Cuida” in a stripped-down format. The artists will also collaborate in a special medley arranged by musical director Ronaldo Tomas.

The artists have worked together before, though not at the same time. Ms. Almalbis, Ms. De Leon, and Ms. Nadal staged sold-out, concerts together at the Music Museum in 2016 and 2017, and held a benefit online show in 2020 to raise funds for the employees of indie music venues in Metro Manila. Meanwhile, Mr. Dancel, Mr. Danao, and Mr. Dumas performed as 3D, headlining three sold-out concerts in 2015, 2016, and 2018. 

ALPAS will be shot at the outdoor area of Conspiracy Garden Café in Quezon City, and in Madrid, Spain where Ms. Nadal is currently based.

“Nami-miss namin yung crowd (We miss the crowd)… Iba yung interaction with actual people sa harap mo habang tumutugtog ka. May batuhan ng emotion dun eh (It’s a different interaction with actual people in front of you. There is more emotion there) …We cope kasi kailangan naming i-share yung music. Mahirap na ikaw lang ang nakakarinig sa sarili mo. (We cope because we need to share our music. It is difficult to be heard only by yourself),” Johnoy Danao said during an online press launch on May 25 held via Zoom. 

According to the artists, the audience can expect great music coupled with nostalgia, minimal dancing, and “swaying.”

“This is as close as you can get to a live gig and we really felt it. I’m sure it will translate with you too,” Aya de Leon said.

Tickets for ALPAS are now available via Kumu at P499 for general admission. For details, visit www.kumu.live/site/events. — Michelle Anne P. Soliman

Insurance firms offer policies to cover travel amid pandemic

MALAYAN INSURANCE Co., Inc., Liberty Insurance Corp. and Prudential Guarantee and Assurance, Inc. have rolled out plans for individuals with trips affected by the coronavirus disease 2019 (COVID-19) pandemic, the Insurance Commission (IC) said in a statement on Thursday.

The IC said the policies offered by these companies include assistance on flight rebooking, airline ticket reimbursements, and hospital cash benefits, among others.

“Those interested to avail of COVID-19 insurance coverage may well consider these products offered by the three companies mentioned,” IC Commissioner Dennis B. Funa was quoted as saying.

“Our fellow Filipinos may examine these insurance products and avail such products that are most responsive to their needs and the particular COVID-19-related risks they seek protection from,” Mr. Funa added.

The statement said Malayan Insurance’s COVID-19 Endorsement plan includes a hospital allowance for up to 30 days if the insured person is infected while abroad. 

The policy also includes a flight cancellation benefit where the insured can reimburse any unused and non-refundable portion of their airline ticket, accommodations, prepaid local tour packages, and prepaid admission tickets affected by the lockdown.

Meanwhile, Liberty Insurance’s Terminal Illness COVID-19 Endorsement policy provides flight rebooking, meals, and hotel accommodation benefits in case of a lockdown in the country the insured individual will travel to.

The plan will also cover hospital confinement abroad, inclusive of intensive care unit and other hospital and doctor fees for up to 143 days from the arrival of the insured in the Philippines.

Lastly, Prudential’s Travel Shield Policy covers trip cancellation, accident burial benefit, emergency medical evacuation and repatriation benefit, daily hospital confinement cash benefit, and compassionate visit benefit, among others.

Nokia says it won 5G deal with DITO

FACEBOOK.COM/NOKIA

MULTINATIONAL telecommunications firm Nokia Corp. announced on Wednesday that it had been selected by DITO Telecommunity Corp. to deploy fifth-generation (5G) services in Mindanao.

In a statement posted on its website, Nokia said the deployment will allow the third telco player to “complete its ambitious strategy” of building a 5G network throughout the Philippines.

“To achieve the desired network performance, Nokia is providing equipment from its comprehensive massive MIMO, multi-band, Single RAN AirScale portfolio to build the Radio Access Network (RAN) for the 5G infrastructure across Mindanao,” it added.

DITO has said it is targeting to bring in 5G to Davao City by 2022, simultaneous with its planned rollout of the technology in other parts of the country.

DITO started offering its mobile services in the National Capital Region on May 17, bringing up the new telco’s presence to 100 cities and municipalities.

The company has said it expects its earnings before taxes to turn “positive” by the third year of its commercial operations.

It plans to introduce fixed broadband services to home consumers in the “next two years.”

DITO is currently capable of serving 37.48% of the country’s population based on the technical audit report by R.G. Manabat & Co. It has a commitment to cover 84% of the population and provide an internet speed of at least 55 megabits per second by the end of its fifth year of commercial operations. — Arjay L. Balinbin

Morissette Amon releases new version of Metropop love song

WHEN the Metro Manila Popular Music Festival (Metropop) returned in 1996 after a hiatus, the then newbie songwriter Trina Belamide wanted to compose a birit (belter) song that, according to her, audiences would applaud. That love song was titled “Shine.”   

“It is a love song that talks about a person or loved one that brings out the best in you,” Ms. Belamide said at an online press launch of the song’s latest version on May 20 held via Zoom.

“Shine” was originally recorded by Ima Castro and she was supposed to perform it live for the song festival. However, due to delayed visa arrangements, Ms. Castro was unable to make it to the festival.

So Sweet Plantado performed the song instead during the 1996 Metropop Song Festival at the Araneta Coliseum where it won second place.

It was later recorded by Regine Velazquez in 2005 for a lotion commercial.

The song found a new life in June 2019 when a video of former The Voice of the Philippines Season 1 finalist Morissette Amon singing it on radio station Wish 107.5’s Bus recording studio was uploaded on YouTube. The video has garnered over 7.9 million views.

This month, Ms. Amon —  who used to perform it at singing contests prior to joining The Voice of the Philippines —  officially released a recording of “Shine” in celebration of the song’s silver anniversary this year.

The release is a re-introduction the song’s original lyrics, composed by Ms. Belamide who collaborated with Star Music to reproduce the composition.

For the new version of “Shine,” ABS-CBN Music creative director Jonathan Manalo teamed up with Filipino-American musical director Troy Laureta to give the song a fresh gospel waltz arrangement. The producers wanted it to have a different flavor outside of the vocal acrobatics that characterize it.

“Even though you don’t change the words,” Ms. Belamide said, “depende sa kumakanta nagkakaroon siya ng ibang kulay sa audience (depending on the singer, the audience sees the song in a different color). I guess that’s the beauty of music and art.” 

Ms. Amon considers “Shine” as a prayer and a thank you in relation to her experience over the past year of remaining with her family and coping with the pandemic.

Ms. Amon’s official version of “Shine” is now available on music streaming services. The song’s music video will be released on Morissette’s YouTube channel with a TV launch on ASAP Natin ‘To on May 30.

For more details, visit Star Music on Facebook at www.facebook.com/starmusicph. — Michelle Anne P. Soliman

House passes measure granting employees pension portability

THE HOUSE of Representatives sitting in plenary approved a bill proposing to make pensions portable as workers change employers and to introduce investment options for pension account holders.

In plenary session late Wednesday, legislators approved House Bill 9343 or the proposed Capital Market Development Act. The measure was elevated by Committee on Banks and Financial Intermediaries Chairman and Quirino Rep. Junie E. Cua to the floor on May 17.

“House Bill 9343 is approved on second reading,” Valenzuela Rep. Weslie T. Gatchalian, sitting as deputy speaker, said.

The proposed law seeks to broaden the capital markets by addressing deficiencies in the current pension system. The bill hopes to make pensions “fully-funded, portable, more actuarially fair, and stable.”

Workers will be required to have an Employee Pension and Retirement Income (EPRI) Account which they will maintain regardless of job changes. Both the employer and employee are required to contribute to the EPRI account, with employers initially contributing 4% and employees earning above minimum wage 1%. Those at minimum wage or lower pay nothing.

Micro enterprises only contribute to EPRI accounts if the employees have at least three years’ service or if a new hire has an EPRI account.

Account holders will have the option to invest in accredited investment products. In the event no investment choice is indicated, regulators will designate a default investment product or products. An investment manager may be appointed by the EPRI account owner to guide the worker in making investment decisions.

The measure also calls for the establishment of the Capital Market Development Council to steer the reform of the pension system and promote investor confidence and financial literacy.

Economic managers have expressed support for the bill, describing as limited the current law governing pensions, the Retirement Pay Law. — Gillian M. Cortez

HSBC exits US retail banking as part of Asia pivot

REUTERS

HONG KONG — HSBC announced it is withdrawing from US mass market retail banking by selling some parts of the money-losing business and winding down others, a long-awaited move as the lender steps up a shift in focus to Asia, its biggest market.

Europe’s biggest bank has for years been trying to shrink its presence in some European and North American markets where it has struggled against competition from larger domestic players.

The bank said in a statement late on Wednesday it would exit retail banking for most individual and small business customers but retain a small physical presence in the United States to serve its international affluent and very wealthy clients.

“They are good businesses, but we lacked the scale to compete,” Noel Quinn, HSBC group CEO, said in the statement.

HSBC unveiled in February a revised strategy focused mainly on wealth management in Asia, and at the same time said it was “exploring organic and inorganic options” for its US retail banking franchise.

As part of Quinn’s gameplan that also involved slashing costs across the banking group, the London-headquartered bank has been looking to step back from sub-scale markets and businesses.

HSBC is also seeking to sell its French retail banking operations as part of the same strategy, and has entered final negotiations to sell that business to private equity firm Cerberus, Reuters reported in March.

Citizens Bank, part of Citizens Financial Group, has agreed to buy HSBC’s east coast personal and small business banking business including 80 branches, and Cathay Bank, a unit of Cathay General Bancorp, has agreed to buy its west coast business including 10 branches, according to HSBC and separate statements from the two US-headquartered banks.

“These transactions, whilst very small in the context of HSBC group, should contribute to streamlining the group,” analysts at Jefferies wrote in a note on Thursday. They added, though, that the bank is expected to still face some investor pushback as it is not completely exiting US retail.

HSBC said it expected to incur pre-tax costs of $100 million connected with the transactions, after which it does not expect to generate a significant gain or loss.

HSBC’s US wealth and personal banking business made a loss of $547 million in 2020, according to the bank’s annual results, versus a $5 billion profit in Asia, primarily from Hong Kong, its most profitable market.

Its global banking and markets division, which includes its investment banking and large corporate businesses, made a profit of $573 million in the United States in 2020.

HSBC expanded into US retail banking in the 1980s as part of a broader strategy to diversify its geographical focus.

However, it has been trying to walk back on this for more than a decade, and in 2011 announced the sale of nearly half of its then 470 US branches, mostly in upstate New York, and also its profitable US credit card arm.

The bank currently has a US network of 148 branches. — Reuters

Nestlé ramps up efforts to address climate change

NESTLÉ Philippines, Inc. is stepping up its efforts to address climate change, citing initiatives in cutting greenhouse gas (GHG) emissions and promoting regenerative agriculture to achieve its net zero target not later than 2050, its top executive said on Thursday.

“We are accelerating our efforts to address climate change in the country. For the next five years, we have set the course towards net-zero with incremental efficiency improvements, investing in regenerative agriculture, manufacturing and packaging, to name a few,” Nestlé Philippines Chairman and Chief Executive Officer Kais Marzouki said in his keynote speech during BusinessWorld Virtual Economic Forum 2021: Special Edition.

He said that the firm has lowered GHG emissions in its factories by 40% since 2010, translating to a reduction in greenhouse gases emitted by 23,000 cars per year.

Mr. Marzouki said a number of the company’s operations, including three Luzon factories and its Makati office, are now fully running on renewable energy.

He also talked about how Nestlé’s coffee brand Nescafé, which uses Robusta coffee beans in its products, practiced local sourcing.

“As the biggest buyer of coffee produce in the country, we prefer to source our raw materials locally… By doing so, we support our farmers while we promote the planting of more crops which absorb GHG emissions and reduce carbon in the atmosphere that benefit and support the local green economy,” the Nestlé official said.

Nestlé has partnered up with Mindanao-based Robusta coffee farmers who are learning about regenerative agriculture and sustainable coffee production.

The firm earlier said that it expects its Nescafé brand to fully source its coffee through responsible means by tracing it back to an identified farmer group and verifying the product with independent groups.

Earlier this month, the company said that it was working towards its net zero emissions target by reducing virgin plastics consumption by a third and cutting GHG emissions in local operations by 30% by 2025, among others. — Angelica Y. Yang

National Artist for Visual Arts Arturo Luz, 94

National Artist for Visual Arts Arturo Luz — FACEBOOK.COM/NCCAOFFICIAL/PHOTOS
National Artist for Visual Arts Arturo Luz — FACEBOOK.COM/NCCAOFFICIAL/PHOTOS

NATIONAL Artist for Visual Arts Arturo Luz passed away on the evening of May 26 at the age 94, his daughter Angela Luz announced on social media.

“…He enriched our lives with his art, with his incredible talent and his genius. As a father and a grandfather, he was simply the best. He was the most kind and generous human being. And as a husband to my mother, he was perfect. He will be terribly missed, but will never be forgotten. His legacy will live on, and will last forever,” Ms. Luz wrote in a Facebook post.

A painter, sculptor, and printmaker, Arturo Luz was a founding member of the modern Neo-Realist school in Philippine art, according to Artnet.com. He was the founding director of the Metropolitan Museum of Manila in 1976, holding the position until 1986.

“[Mr. Luz] established set principles in museum work informed by his unique minimalist aesthetic,” a tribute on the Metropolitan Museum Facebook page reads. “Just like his art, his curatorial work espoused a sharp and polished finish, mounting a total of 108 exhibitions in 10 years.”

“A prolific artist who helped develop and propel art since the 1960s, Arturo Luz is a true luminary in Philippine art and its history, whose influence is deeply felt until today,” said the Met.

Mr. Luz was also the first executive director of the Design Center of the Philippines, serving for 14 years after his appointment in 1973.

He established the Luz Gallery in 1960, and by doing so “professionalized the art gallery as an institution and set a prestigious influence over generations of Filipino artists,” said the National Commission for Culture and the Arts (NCCA).

“We mourn a huge loss with the passing of one of the Philippines’ great modern artists but we will forever be grateful for the creative legacy that Arturo Luz has bequeathed the Filipino nation.”

Born on Nov. 20, 1926, Luz studied Fine Arts at the University of Santo Tomas, then took further studies at the Art School of the Brooklyn Museum in New York, and at the Académie Grade Chaumière in Paris. He also received a diploma from the California College of Arts and Crafts in Oakland in 1994.

He participated in numerous international shows including the Philippine Cultural Exhibition in New York (1953), Arte de America y España (1963), the 11th São Paolo Biennial (1971), the Tokyo International Print Biennial (1974), and the 8th British International Print Biennale (1984).

He was famous for creating geometric artworks. His mural titled Black and White is displayed at the lobby of the Cultural Center of the Philippines’s Bulwagang Carlos V. Francisco (Little Theater). Many people are familiar with his sculptures which can be found in public spaces like the plaza in front of the Ayala Museum in Makati, and the stainless steel cube in front of the Benguet Mining Corporation Bldg. in Pasig.

Other works are part of the National Museum of the Philippines’ collection of National Fine Arts, including seven outdoor sculptures and a pair of burlap paintings.

“We will miss Mr. Luz whose presence has loomed large in shaping Philippine modern art and has been kind to our institution,” the National Museum of the Philippines wrote on Facebook.

In 1997, Mr. Luz was recognized as a National Artist for Visual Arts, the highest national recognition given to Filipino artists in the Philippines.

Preparations for his state funeral are underway and details will be announced shortly, said the NCCA. — MAPS

Amazon brings James Bond, Rocky to fight Netflix with $8.5-B MGM buy

IMDB.COM

AMAZON.COM, Inc. will buy MGM, the fabled US movie studio home to the James Bond franchise, for $8.45 billion, giving it a huge library of films and TV shows and ramping up competition with streaming rivals led by Netflix and Disney+.

The deal aims to bolster Amazon’s television-focused studio with new and historic filmmaking from MGM, which has snapped up lucrative series including Rocky and Tomb Raider since its founding in 1924.

Streaming video helps the world’s largest online retailer draw people to subscribe to Prime, a club with fast shipping, and to shop more once they’re members. Privately-held MGM, or Metro Goldwyn Mayer, also owns the Epix cable channel and makes popular TV shows including Fargo, Vikings, and Shark Tank.

Jeff Bezos, Amazon’s founder, laid out the rationale for the deal at the company’s annual shareholder meeting on Wednesday.

“MGM has a vast, deep catalog of much beloved intellectual property (IP),” he said. “With the talented people at MGM and the talented people at Amazon Studios, we can reimagine and develop that IP for the 21st century.”

Mr. Bezos said it was “premature” to name Amazon Studios as the fourth pillar of the company after its seller marketplace, cloud division, and Prime, but it was working toward that milestone. More than 175 million Prime members watched content on Amazon in the past year, and streaming hours were up 70%, he said.

July 5 — the day Amazon was incorporated in 1994 — will be the date long-time cloud chief Andy Jassy takes over as CEO, Mr. Bezos said.

Amazon’s Prime Video faces a long list of rivals including Netflix, Inc., Walt Disney Co.’s Disney+, HBO Max, and Apple, Inc.’s Apple TV+. The companies have increased spending and expanded in international markets, capturing the pandemic-led shift to binge-watching shows online.

To stay competitive, Amazon has also courted fans of live sports and picked up licenses to stream games, boasting a long-term deal with the National Football League that was estimated to cost about $1 billion per year.

The proliferating streaming services are scrambling for content libraries and brands they can expand. Analysts have said this is a big motivation for another round of consolidation of media properties after a brief hiatus during the pandemic.

“With new entrants to streaming from all the major studios and TV networks, Amazon has to increase its commitment to video or risk losing engagement,” said Jim Nail of research firm Forrester.

Underscoring the trend toward consolidation, AT&T, Inc. announced a $43-billion deal last week to spin out its WarnerMedia business and combine it with Discovery, Inc., one of the most ambitious yet in the streaming era.

Amazon’s Hollywood studio purchase is a first for a big US tech company and could spark further interest in Silicon Valley, a source familiar with the matter said.

The acquisition is Amazon’s second-biggest after Whole Foods Market, which it bought for $13.7 billion in 2017.

At almost $9 billion, the lofty price is about 37 times MGM’s 2021 estimated EBITDA —  or almost triple the enterprise value-to-EBITDA multiple that Discovery’s deal implied for AT&T’s content assets —  according to Reuters Breakingviews.

At the same time, Amazon posted its fourth consecutive record quarterly profit in April.

MGM started a formal sale process in December, when it was estimated to be worth about $5.5 billion. Morgan Stanley and LionTree advised MGM on the deal.

The deal will provide fuel for the Seattle company’s critics in Washington who complain it is already too big and powerful, but experts said the deal poses few classic antitrust concerns.

LUCRATIVE FRANCHISE RIGHTS
Amazon has picked up Academy Awards over the years and slowly moved from art-house fare toward content with wider appeal. The MGM acquisition accelerates that move, giving it rights to James Bond, one of the most lucrative franchises in film history that’s earned nearly $7 billion at the box office globally, according to MGM.

Other classic films in MGM’s library include RoboCop, Moonstruck, and The Silence of the Lambs.

The potential to mine this intellectual property, by making new content based on popular characters, will help Amazon draw viewers to Prime, two former Amazon executives told Reuters.

MGM also licenses content for video games, which could benefit Amazon’s development efforts in that area.

Still, Amazon efforts to profit off the library won’t be easy, or cheap.

In many cases, MGM’s content is tied up in multi-year deals with television networks, the former Amazon executives said. Amazon cannot simply air MGM’s reality show The Voice, for instance, which contractually is in the hands of NBC.

Bringing a new installment of the James Bond saga online instead of in theaters would be a particularly difficult task, the sources said. The terms under which MGM acquired the franchise leave control in the hands of the Broccoli family, the Bond films’ producers.

Barbara Broccoli and Michael G. Wilson of Eon Productions said in a statement, “We are committed to continuing to make James Bond films for the worldwide theatrical audience.”

News of the acquisition followed quickly on the upcoming return of Jeff Blackburn, Amazon’s former senior vice-president overseeing content and M&A, who had left early this year.

Incoming Amazon CEO Mr. Jassy had particular trust in Mr. Blackburn after decades at Amazon together, hoping he might shepherd a complicated merger, the sources said. —  Reuters

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