Charles Edwards as Celebrimbor in The Lord of the Rings: The Rings of Power (2024), Amazon MGM Studios

Jennifer Salke, the head of Amazon MGM Studios, recently shared that the company is talking about potentially purchasing the rights to The Lord of the Rings from Embracer Group.

LOS ANGELES, CALIFORNIA – AUGUST 15: (L-R) Vernon Sanders, Head of Global TV of Amazon Studios, and Jennifer Salke, Head of Amazon Studios attends “The Lord Of The Rings: The Rings Of Power” Los Angeles Red Carpet Premiere & Screening on August 15, 2022 in Los Angeles, California. (Photo by Emma McIntyre/Getty Images for Prime Video)

In an interview with Variety, Salke was asked by K.J. Yossman, “Embracer, who’ve had a rocky 18 months, currently own the majority of Tolkien’s IP. Could we see a situation in which Amazon potentially acquires the company?”

Salke replied, “We’re always talking about those opportunities but I don’t have anything to share [right now].”

Morfydd Clark as Galadriel; Benjamin Walker as High King Gil-galad; Ismael Cruz Córdova as Arondir in The Lord of the Rings: The Rings of Power (2024), Amazon MGM Studios

Embracer Group revealed back in 2023 that it was able to acquire Middle-earth Enterprises at a shockingly low price. The company revealed in its 2022-2023 Annual Report, “The most significant acquisition of these acquisitions is the acquisition of the Middle-earth Enterprises which owns a vast intellectual property catalog and world-wide rights to motion pictures, video games, board games, merchandising, theme parks and stage productions relating to the iconic fantasy literary works The Lord of the Rings trilogy and The Hobbit by J.R.R. Tolkien, as well as matching rights in other Middle-earth-related literary works authorized by the Tolkien Estate and Harper Collins, which have yet to be explored.”

It then shard, “The consideration for the Middle-earth Enterprises acquisition sums up to SEK 4,265 million, where SEK 2,901 million has impacted the cash flow.”

4.265 billion Swedish Krona converted to around $398.8 million at the time. According to Variety, the rights for The Lord of the Rings were estimated to be “worth up to $2 billion.”

Robert Aramayo as Elrond in The Lord of the Rings: The Rings of Power (2024), Amazon MGM Studios

In fact, it was reported that Amazon spent $250 million just to secure the rights for The Rings of Power. albeit showrunner J.D. Payne admitted it did not secure the rights to The Silmarillion or Unfinished Tales.

He told Vanity Fair, “We have the rights solely to The Fellowship of the Ring, The Two Towers, The Return of the King, the appendices, and The Hobbit. And that is it. We do not have the rights to The Silmarillion, Unfinished Tales, The History of Middle-earth, or any of those other books.”

Morfydd Clark as Galadriel in The Lord of the Rings: The Rings of Power (2024), Amazon MGM Studios

Embracer Group does appear to be in a very weakened state. The company announced a massive restructuring program in June 2023 after a $2 billion deal collapsed in May.

The company’s CEO Lars Wingefors explained the plan, “The program is divided into different phases until March 2024 with focus on cost savings, capital allocation, efficiency and consolidation. The initial phase, which is initiated immediately, mainly targets cost savings across the group.”

He continued, “The next phase, which also starts immediately, will require further analysis to determine specific actions. The last phase will focus on internal consolidation, further resource utilization and more synergies across the Group. The actions for each affected company will be implemented by the new interim COO and CSO in collaboration with each operative group CEO and management teams.”

Later in the letter he detailed, “The actions will include, but not be limited to, closing or divestments of some studios and the termination or pausing of some ongoing game development projects. It will also include decreased spending on non-development costs such as overhead and other operating expenses. We will reduce third party publishing and put greater focus on internal IP and increase external funding of large-budget games.”

Morfydd Clark as Galadriel in The Lord of the Rings: The Rings of Power (2024), Amazon MGM Studios

The company then sold off Gearbox Entertainment for $460 million to Take-Two Interactive Software, Inc in March 2024.

It also sold off Sabre Interactive to Beacon Interactive for $247 million. Beacon Interactive is controlled by Saber Interactive co-founder Matthew Karch, who was also Embracer Group’s Interim Chief Operating Officer.

A screenshot from Warhammer 40,000: Space Marine 2 (2024), Focus Entertainment

However, Wingefors noted in April that the company had no plans to sell any more assets. During a Q&A portion of a press conference discussing the sale of Gearbox Entertainment, he said, “Obviously, we are ending the restructuring program now, end of March. So, there’s not many days left. And the Gearbox structure process has been part of that restructuring program. Now, you know, I’ve been getting approached and we are getting approached I would say if not by daily, but a weekly basis, by companies that would like to acquire certain assets within the group. And I’ve been very clear that they are not for sale because they are a very important part for the Group and the shareholders of the Group going forward.”

He added, “So that’s why we’re taking the more difficult route to actually divest businesses that has a negative cash flow, which is more difficult transactions, but makes the remaining part of Embracer more cash flow generative with a more clear focused strategy into the future.”

Robert Aramayo as Elrond in The Lord of the Rings: The Rings of Power (2024), Amazon MGM Studios

However, later that month Embracer Group announced it was separating into three separate entities: Asmodee, Coffee Stain & Friends, and Middle-earth Enterprises & Friends

Interestingly, Middle-earth Enterprises & Friends not only contains The Lord of the Rings, but also Tomb Raider, of which Amazon is working on a live-action TV series as well as a new video game.

A screenshot from Tomb Raider (2013), Crystal Dynamics

What do you make of Salke’s comments regarding purchasing the rights to The Lord of the Rings?