Spotify has spent $375 million in cash on buying podcast companies so far this year – across three deals with a total value of $404m.
The news was quietly confirmed in a financial update filed in the US by Spotify last week, and spotted by MBW today (August 5).
Spotify has previously confirmed that, in February, it spent approximately €300m ($343m) on two US-based ‘cast firms: distribution software company Anchor, and independent content producer Gimlet Media.
Now we know exactly how much Spotify spent on these two firms, in addition to true crime podcast maker Parcast (trading as Los Angeles-based Cutler Media LLC) which it bought in April.
The upshot: if Spotify sticks to its previously-announced plan of spending between $400m and $500m on acquisitions this year, it has about $100m left in the tank.
Parcast (acquired April 2019). Deal price: $55m.
According to details within a Form 6-K filed last week with the SEC, Spotify agreed a €49m ($55m) deal for Parcast on April 1, of which €36m ($40m) was paid in cash.
The remainder of the Parcast deal (€13m / $15m), said Spotify, would be “related to the estimated fair value of contingent consideration”, which would be “dependent on certain user engagement targets”.
This latter figure could go up, however: Spotify noted that “the maximum potential contingent consideration is €43 million over the next three years” – the equivalent of $53m.
Parcast was founded in 2016 and has launched 18 premium podcast series including Serial Killers, Unsolved Murders, Cults and Conspiracy Theories and the studio’s first fiction series, Mind’s Eye.
Spotify said that the acquisition would enable it “to bolster [our] content portfolio and utilize Parcast’s writers, producers, and researchers in the production of high-quality content”.
Anchor (acquired February 2019). Deal price: $154m.
Spotify has also given confirmed financial details about its acquisition of Anchor and Gimlet Media.
SPOT acquired New York-based Anchor FM Inc. on February 14 for a total consideration of €136m ($154m).
This purchase price consisted of €125m ($142m) in cash, in addition to €11m ($12.5m) “related to the fair value of partially vested share-based payment awards”, which have instead been replaced with share-based payment awards in Spotify.
Included in the Anchor deal was €20m ($22.7m) of equity instruments granted to certain employees that had vesting conditions contingent on continued employment. Just over half of this figure (€11m) was included in the purchase consideration, with a further €9m ($10m) on offer as a post-deal expense.
Anchor is an online platform which enables users to both create and distribute podcast content.
Spotify said the Anchor buyout would allow it “to leverage Anchor’s creator-focused platform to accelerate the Group’s path to becoming the world’s leading audio platform”.
Gimlet Media (acquired February 2019). Deal price: $195m.
As for Gimlet Media, it was the biggest deal of the bunch.
Spotify acquired the podcast producer on February 15 for a total consideration of €172m ($195m), consisting of €170m ($193m) in cash.
The remainder of this purchase price (€2m) was “related to the fair value of partially vested share-based payment awards replaced”.
Multiple press reports in February suggested Spotify paid over $200m – perhaps as much as $230m – for Gimlet, but it looks like the true number was slightly south of these figures.
New York-based Gimlet is the creator of podcasts such as Startup, Crimetown and The Pitch. It was founded in 2014 by Alex Blumberg and Matt Lieber.
In its SEC filing last week, Spotify said this buyout would allow it “to leverage Gimlet’s in-depth knowledge of original content production and podcast monetization”.
Spotify announced its Q2 results last Wednesday (July 31), which showed quarterly revenues of €1.51bn, with a Monthly Active User count at the close of June of 232m.
In an update on podcasts, the firm told investors: “Tens of millions of users are now streaming podcast content on a monthly basis, and more are discovering new forms of audio content each day. Our podcast audience grew more than 50% Q/Q and has nearly doubled since the start of the year.”
It said that more than 30,000 new podcasts were delivered through its Spotify for Podcasters platform.Music Business Worldwide