Behind Podcasting's M&A Frenzy: "Easier to Buy Than Build"

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Podcast firm Wondery had been seeking up to $300 million in a sale.

Companies like Wondery, Stitcher, Megaphone, The Ringer and Serial Productions all became acquisition targets in 2020 amid a boom in listenership.

Amazon’s Dec. 30 agreement to buy Wondery — the maker of popular shows Dirty John and The Shrink Next Door — capped a year of notable consolidation in the podcast industry. Companies like Stitcher, Megaphone, The Ringer and Serial Productions all became acquisition targets in 2020 amid a boom in listenership.

Some 104 million Americans listened to podcasts monthly last year, Edison Research and Triton Digital estimated in their 2020 Infinite Dial report, up from 90 million in 2019. But the growing audience only partially explains the M&A appeal.

Amazon, citing the evolution of “listener habits,” said it plans to use Wondery’s programming to help it expand the non-music selection available via streaming service Amazon Music. It was for a similar reason that music streaming giant Spotify added The Ringer to its lineup of in-house podcast studios in 2020 after the acquisitions of Gimlet Media and Parcast a year earlier. SiriusXM, meanwhile, chose to make a major push into podcasting by purchasing producer and distributor Stitcher.

“Making great audio is really, really hard,” says Tom Webster, a senior vp at Edison Research, citing the relatively small talent pool. “It’s much easier to buy than build.”

Per Amazon, Wondery shows will continue to be distributed widely, but if the e-commerce giant follows the Spotify playbook, it could soon start releasing some programming exclusively on its platform. Wondery, which will be led by COO Jen Sargent after the deal closes, declined to share terms of the acquisition, but The Wall Street Journal reported that the price tag was about $300 million.

During the past two years, media and tech companies have invested more than a billion dollars to buy up podcast production and technology capabilities. That’s sizable for an industry that brought in slightly more than $700 million in domestic ad revenue in 2019, according to the Interactive Advertising Bureau.

Many acquirers are betting that podcasting still has some growing to do as it continues to supply proven IP to Hollywood studios and deliver results to advertisers. “The depth of engagement you get on podcasts is quite unique,” says Zoe Soon, vp of experience center at IAB, explaining that bigger brands have moved ad spending to podcasts in recent years. “That’s a real indication of the confidence and strength of the medium.”

This story first appeared in the Jan. 6 issue of The Hollywood Reporter magazine. Click here to subscribe.