Sports is one of the most popular topics in podcasts, and today Spotify doubled down on its podcast strategy with a big acquisition to grow its sports coverage: it announced that it is buying The Ringer, the popular network of podcasts created and run by broadcaster Bill Simmons, with 30 sports and other podcasts in its mix and some 100 million downloads per month. Spotify today has 700,000 podcasts in its catalog and earlier today noted that the business grew 200 percent in the last quarter.
Terms of the deal are not being disclosed; however, when the deal between Spotify and The Ringer was first rumored last month, it was noted that the latter company was profitable and had revenues of $15 million in 2018. As a guide, Spotify last year spent what's estimated to be between $400 million and $500 million acquiring other podcast assets.
Putting aside the price, this is a huge deal for Spotify, picking up one of the premium and most popular brands in podcasting to boost what is already a fast-growing business for the company.
But Spotify is using this acquisition not just to double down on sports content, but to make a much bigger move into how it believes not just audio but popular media overall is evolving. "The trend that we are investing in here is that radio is moving online," CEO Daniel Ek said in the earnings call today, later adding: "We bought the next ESPN."
Of course, Simmons and his team also have a very strong following for shows that cover pop culture and more. But for now, sports are front and center in the company's strategy.
"We look forward to putting the full power of Spotify behind The Ringer as they drive our global sports strategy,” said Dawn Ostroff, Spotify's Chief Content Officer, in a statement. “As we set out to expand our sports and entertainment offerings, we wanted a best-in-class editorial team. Bill Simmons is one of the brightest minds in the game and he has successfully innovated as a writer and content creator across mediums and platforms. The Ringer's proven track record of creating distinctive cultural content as well as discovering and developing top tier talent will make them a formidable asset for Spotify."
“Spotify has the unique ability to truly supercharge both content and creator talent across genres,” said Bill Simmons, The Ringer founder and podcast host, in his own statement. “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. We couldn’t be more excited to unlock Spotify’s power of scale and discovery, introduce The Ringer to a new global audience and build the world’s flagship sports audio network. We’re joining one of the best media companies in the world. It’s an incredible day for us.”
It's not clear how this will impact The Ringer's activity on other platforms; it has a huge draw through Apple and Google Play, for example. But it's notable to me that The Ringer is built on an ad-based model, which Spotify will be looking to for a boost in its own ad sales, which this last quarter totalled only €217 million, or about 11.7 percent of its overall revenues. Vox reports that the Ringer's whole staff of 90 is coming over with the deal.
The transaction is expected to close in Q1 2020, Spotify said.