Audacy - Wide Orbit 220

Audacy’s $40 million acquisition of WideOrbit’s digital audio streaming and advertising technology is the latest example of an audio company snapping up a tech firm to strengthen and expand its position in the flourishing digital audio marketplace. Companies including iHeartMedia, Spotify, Amazon, SiriusXM and Pandora have also turned their focus to ad tech, spending hundreds of millions of dollars.

Owning the digital audio streaming and ad tech business of WideOrbit, “gives us much greater control over the consumer listening experience on the Audacy platform than was possible using a third-party streaming service,” Audacy CFO Rich Schmaeling explained to investors during the company’s third quarter earnings call last week. “It enables our engineers to focus on developing innovative features and functionality and it significantly speeds our time to market.” That will allow Audacy to “rapidly bring advertising innovations to market,” Schmaeling added.

The deal to buy an exclusive, perpetual license to WideOrbit’s digital audio streaming technology and the related assets and operations of WO Streaming was announced Oct. 20. WO Streaming, now rebranded as AmperWave, is a cloud-based distribution and monetization platform for live and on-demand audio streams. The entire WO Streaming team, led by John Morris, Senior VP Streaming, has joined Audacy.

CEO David Field called it “an important acquisition” that will give the company control of its end-to-end product road map. Importantly, Field told investors, adding the technology will “accelerate our growth opportunities while enabling us to deliver a robust portfolio of audio and digital marketing solutions to our partners and clients.”

Schmaeling said it would have cost more than the $40 million investment to build the technology on its own.

The acquisition comes with a modest customer base of audio companies that were using WideOrbit to distribute and monetize their audio streams. Schmaeling pegged the WO streaming business revenue base at less than $10 million and said the business “historically lost a little money.” But thanks to cost synergies, he predicts it will be profitable during its first full year of Audacy's ownership. “We are thrilled to get this deal done and look forward to leveraging many of the investments we are making for ourselves for the benefit of our AmperWave clients,” he said.

The radio group has made its biggest financial moves in digital audio during the past few years. Audacy struck a $22.5 million deal earlier this year to buy Podcorn, which operates a marketplace that connects advertisers with podcasters to create native advertising and branded content. Audacy in 2019 struck two deals totaling $48 million to buy podcast creators Cadence13 and Pineapple Street Studios.

As podcast and streaming monetization becomes a greater focus, companies across the spectrum are bulking up on ad tech. In the biggest deal by iHeartMedia in more than a decade the company bought Triton Digital for $230 million earlier this year following a $50 million deal last October for the podcast ad tech and analytics company Voxnest.

SiriusXM bought Midroll/Stitcher for $325 million and Simplecast for $28 million last year, Spotify acquired Megaphone for $235 million, and Amazon snatched up the podcast advertising and hosting company Art19 in June. Going back to 2018, Pandora cut a deal to buy ad tech firm AdsWizz for $145 million.