How bad did Spotify want to break into the sports audio marketplace? Apparently bad enough to pay $250 million to acquire The Ringer. Bloomberg reports that’s how much the digital media company sold for, including its portfolio of more than 40 podcasts, including The Bill Simmons Podcast hosted by the company’s founder.
Bloomberg says Spotify will initially pay about $200 million for The Ringer with an additional $50 million to be paid at a later date. Specifics of the deal have not yet been made public by the company, which announced the acquisition last week.
If accurate it would push the amount of money Spotify has invested in podcasting past the $400 to $500 million range it told investors last year the company would spend. Spotify had already spent $402 million in a series of deals last year to acquire Gimlet Media, Parcast and Anchor. That’s in addition to striking several high-profile content deals, such as the alliance with Higher Ground, the production company created by Barack and Michelle Obama, to create podcasts. The deal will reportedly pay the former first couple $10 to $20 million.
The streaming music service may believe it has no choice to put more money toward building a podcast business. “It’s clearer than ever to us that podcast listening is driving overall health in our business,” CEO Daniel Ek said on a conference call with analysts. Spotify said that 16% of its active users listened to a podcast during the fourth quarter and it had a 200% year-over-year growth in podcast hours streamed. But the real number in its sights may be profitability. Despite adding more users the company has continued to post quarterly losses because of the deep cut of royalties paid on its music content.
Dawn Ostroff, Chief Content Officer at Spotify, said The Ringer will become a cornerstone in the company’s “global sports strategy.” She said that The Ringer’s track record of discovering and developing talent will make them a “formidable asset” for Spotify.
The Ringer was founded by former ESPN commentator Bill Simmons in 2016 and the company says it now has more than 100 million downloads per month. “We spent the last few years building a world-class sports and pop culture multimedia digital company and believe Spotify can take us to another level,” Simmons said in a statement. He reportedly owns a 10% stake in the company.
Sports has emerged as one of the hottest streaming trends. Last year iHeartMedia rolled out iHeartRadio Sports, a website that aggregates content from sports podcasts, nearly 200 local sports radio stations, content from the company’s syndicated Fox Sports Radio Network, and a long list of in-house personalities. Entercom did the same thing last August when it debuted the Radio.com Sports Digital Network with a mix of daily live sports talk programming and more than 75 hours of original podcast content weekly.