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When the podcast platform Audioboom announced last June it was getting a $4 million cash infusion from Michael Tobin, the company's chairman, and Candy Ventures, its largest shareholder, they said the cash would be used to provide minimum advertising revenue guarantees to new content partners as well as offer similar guarantees when existing partners’ contracts come up for renewal. That’s just come into play as the company announces it has renewed an exclusive sales and distribution contract with one of Audioboom’s most popular entertainment podcasts. Which one? That’s a question the company isn’t willing to answer.

Typically, when companies strike renewals with a popular show, they want the news reported far and wide. But Audioboom reps aren’t offering any details about the renewal, at least for the time being. “We chose not to identify the podcast as we'd be giving away too much information to our competitors,” said a spokesperson who added that it is financial information the publicly-traded company is required to tell stockholders about. 

What the company disclosed to investors is that that the unnamed producer has been guaranteed at least $1.75 million in payments during the next two years. It said the deal includes “the opportunity to work with the content partner on further podcast projects together.” Whatever the show is, Audioboom said the podcast has been downloaded more than 140 million times, and during 2019 the company sold more than 98% of its available advertising inventory. 

The creation of what’s known as a special purpose vehicle last summer, which they named SPV Investments Ltd., was designed to help accelerate its acquisition of established podcasts and production of its own shows as the company stakes out a bigger role in the content creation side of the business as a way to grow its advertising revenue. Audioboom said at the time that such revenue guarantees remain “very much an exception” when negotiating the terms of a deal with content providers, and are only used to secure “leading, high profile, high revenue producing podcasts.”

Audioboom quickly put the money to use. It used $1 million for a revenue guarantee for one of its most popular entertainment podcasts. It didn’t reveal which, but it’s believed to be the And That’s Why We Drink podcast which signed a commercial agreement with Audioboom last September. The deal gave Audioboom exclusive sales and distribution rights for the show for 18 months, with the opportunity to work with the content partner on additional podcast projects. Audioboom disclosed Wednesday that the revenue guarantee was later cut to roughly $500,000. With the second deal announced this week, it has $1.8 million left in the fund for other deals.

The investment by Tobin and Candy Ventures, which owns a 24% stake in the company, came with benefits. Tobin and Candy Ventures will receive 8% of the net advertising revenue from any podcast for which their money was used to provide a guarantee. They’ll also get warrants to buy up to 10 million shares of company stock exercisable during the next five years. An initial grant of 2.5 million warrants has already been made, split equally between Tobin and Candy Ventures. 

Audioboom has told other investors that the move also eliminated the need to do an equity offering that would have diluted the company’s stock value for current shareholders. In its announcement Wednesday, the company noted the use of a special purpose vehicle also allows Audioboom to offer minimum guaranteed advertising revenue without tying up the company’s working capital. It reiterated that the maneuver will also be used when negotiating terms with only the “leading, high profile, high revenue producing podcasts.”