INTERNATIONAL - Spotify Technology SA is paying close to $200 million upfront for the Ringer, the growing online sports and pop-culture outlet, as part of its push into podcasting, according to a person with knowledge of the matter.
The previously undisclosed price of 180 million euros will be followed by more than $50 million later, said the person, who asked not to be identified because the terms aren’t public. Spotify, the world’s largest streaming audio service, is expected to detail the costs in a regulatory filing soon.
Spotify has now spent more than $600 million to acquire four companies that can accelerate its podcasting business -- the Ringer, Gimlet Media, Anchor and Parcast. Three of those companies are studios that produce lots of podcasts while the fourth, Anchor, makes tools for podcasters.
Spotify already operates the world’s largest paid music service, and is now challenging Apple Inc. as the dominant way people listen to podcasts. The company has commissioned original exclusive series on top of its acquisitions.
Spotify views podcasting as a business that can help it on the path to profitability. While the company has 124 million subscribers and its sales grew 24% in the most recent quarter, it loses money because record labels, publishers and artists collect more than 65 cents out of every $1 in revenue. Podcasting can boost Spotify’s advertising sales, and, eventually, could dilute the music industry’s take.
The deal is a windfall for Bill Simmons, a best-selling author who founded the Ringer in 2016 after a long run at ESPN as a columnist and on-air personality. The Ringer employs dozens of journalists who write for its websites, but appeals to Spotify mostly as a large network of sports and pop-culture podcasts.
Sports is one of the most popular genres on radio and in podcasting, and Spotify and the Ringer already collaborate on a daily show, “The Hottest Take.” Simmons’s namesake podcast is the most popular in the network, featuring interviews with professional athletes, celebrities, and, just this past week, Simmons’s old boss, Walt Disney Co. Chief Executive Bob Iger.
Simmons was the largest shareholder of the Ringer. HBO, a division of AT&T Inc., owned a 10% stake. The deal requires Simmons to keep working at Spotify for some time, and also includes protections to ensure Spotify doesn’t cut much of his staff, said the person.