Placing a big bet on the burgeoning podcasting business, Spotify announced deals Wednesday morning to purchase podcast production house Gimlet Media and Anchor, which provide tools for podcast creators. The pair of deals brings the music streaming company both podcast content and technology. Gimlet is best known for the shows “Reply All,” “StartUp” and “The Nod,” while Anchor offers podcast creation, publishing and monetization tools.
While terms of the deal were not disclosed, Recode reports that Spotify is paying $230 million for Gimlet.
The acquisitions give the music streaming service a significantly larger podcast footprint. The Gimlet acquisition is easily the biggest-ever in podcasting, quite a step up from the $55 million that iHeartMedia paid to acquire Stuff Media last year. Gimlet was last valued at $70 million when it raised money in 2017.
“These acquisitions will meaningfully accelerate our path to becoming the world’s leading audio platform, give users around the world access to the best podcast content, and improve the quality of our listening experience as well as enhance the Spotify brand,” Spotify co-founder and CEO Daniel Ek said in making the announcement. “We are proud to welcome Gimlet and Anchor to the Spotify team, and we look forward to what we will accomplish together.”
Spotify apparently has more M&A activity in the pipeline. The Sweden-based company says it intends to acquire more podcasting companies, investing a total of $400 million to $500 million for multiple acquisitions in 2019.
Brooklyn-based Gimlet was co-founded in 2014 by former “This American Life” producer Alex Blumberg and former Boston Consulting Group consultant Matthew Lieber. It says it has more than 7 million downloads monthly. Gimlet and Spotify aren’t exactly strangers to one another. Gimlet partnered with Spotify to launch season two of “Crimetown” on the on-demand audio service.
Beyond content, the Gimlet purchase will give Spotify a state-of-the-art production center. Gimlet just completed its move into a renovated 28,000-square-foot facility in Brooklyn. It features 12 podcast studios and a 375-square-foot live room.
“Spotify is poised to become the largest audio platform in the world and we are excited for Gimlet’s award-winning podcasts to connect with new audiences around the world,” Blumberg and Gimlet co-founder Matt Lieber said in a joint statement. “The medium of audio is uniquely great at creating human connection and understanding. We are thrilled that Gimlet is joining Spotify to do that at a global scale, on the platform and beyond.”
Added Anchor CEO Michael Mignano, “We look forward to continuing to empower creators all over the world to build an audience, generate revenue and most importantly, have their voices heard.”
The transactions are expected to close in first quarter 2019 and are subject to customary closing conditions.