×

Spotify Buys Podcast Startups Gimlet Media and Anchor, Plans Up to $500M in Acquisitions in 2019

Streamer reports 96 million paying subs and first-ever operating profit for Q4, but forecasts 2019 losses with M&A strategy

Spotify is best known as a music-streaming service — and now it’s placing a big new bet on building a podcasting empire.

On Wednesday, Spotify announced all-cash deals to acquire Gimlet Media, the podcast producer whose shows include “Homecoming,” “StartUp” and “Reply All,” and Anchor, which offers tools for podcast creation, publishing, and monetization.

Terms of the deals were not disclosed. Spotify is paying $230 million for Gimlet, per a Recode report. The transactions are expected to close in the first quarter of 2019 and subject to usual closing conditions.

Spotify chief Daniel Ek is looking for more M&A: The company disclosed that it plans to acquire more podcasting companies, pegging total spending of $400 million-$500 million on multiple acquisitions in 2019.

“These acquisitions will meaningfully accelerate our path to becoming the world’s leading audio platform, give users around the world access to the best podcast content, and improve the quality of our listening experience as well as enhance the Spotify brand,” Ek said in announcing the acquisitions. “We are proud to welcome Gimlet and Anchor to the Spotify team, and we look forward to what we will accomplish together.”

Brooklyn-based Gimlet Media was founded in 2014 by former public-radio producers Alex Blumberg and Matt Lieber. In addition to its lineup of original podcast series, it operates an in-house advertising agency and Gimlet Pictures, a film and TV development and production arm. Among Gimlet’s Hollywood deals was a pact with Amazon Studios to adapt podcast “Homecoming” as a series starring Julia Roberts.

Anchor FM Inc. was founded in 2015 by Michael Mignano and Nir Zicherman. The Manhattan-based startup provides a free-to-use podcasting platform and content hosting, along with monetization options. The company claims it powers more than 40% of the industry’s new podcasts, with an aggregate of 15 billion hours of content hosted on Anchor in the fourth quarter of 2018.

Spotify announced the acquisitions along with releasing Q4 2018 results. The company now has over 96 million Spotify Premium subscribers — up 36% year over year — across 78 markets. Total monthly active users climbed 29%, to 207 million, for the year-end quarter, with growth topping Spotify’s forecasts in most markets with especially strong growth in Latin America and other emerging regions, the company said.

Spotify’s Q4 revenue was $1.7 billion (€1.495 billion), up 30%. The company cut operating costs by 17% in the fourth quarter, resulting in an operating profit of $107 million (€94 million) — Spotify’s first quarterly operating profit.

For 2019, because of the podcast M&A strategy, Spotify expects to return to red ink. It forecast full-year 2019 operating loss of between $228 million-$410 million (€200 million-€360 million) on revenue of $7.23 billion-$7.74 billion (€6.35 billion-€6.8 billion), up 21%-29% versus 2018. Spotify expects Premium subscribers to be 117 million-127 million at the end of 2019 and total monthly active users to b in the 245 million-265 million range.

In a blog post, Ek said that, based on radio-industry data, Spotify assumes that over time more than 20% of all the streaming company’s listening will be non-music content. “This means the potential to grow much faster with more original programming — and to differentiate Spotify by playing to what makes us unique — all with the goal of becoming the world’s No. 1 audio platform,” he wrote.

Gimlet Media had raised $28.5 million in funding from investors including WPP, Laurene Powell Jobs’ Emerson Collective, Cross Culture Ventures, Betaworks Ventures, Stripes Group, and Graham Holdings.

Anchor had raised $14.4 million, according to Crunchbase. Its long list of backers includes Accel, Acequia Capital, Mick Batyske, Scott Belsky, Betaworks, the Chernin Group, CrunchFund, Eniac Ventures, Nir Eyal, GV, Homebrew, Craig Kallman, Avi Muchnick, Omidyar Network, SV Angel, Questlove, and Vijay Vachani.

Popular on Variety

More Music

  • Big Hit Entertainment, Home to BTS,

    Big Hit Entertainment, Home to BTS, Posts Blockbuster Results for First Half of 2019

    South Korea’s Big Hit Entertainment, home to BTS, revealed its revenues for the first half of 2019 at an event called “Big Hit Corporate Briefing With the Community” held in Seoul today. The company posted record revenues of $166.3 million — just $12 million short of its revenues for all of 2018, according to analysis [...]

  • siriusxm on playstation

    SiriusXM Announces $4 Streaming Plan for Students

    SiriusXM took another step towards taking its subscription service past the car Tuesday: The company announced a new student subscription tier that gives eligible college students access to music and talk radio stations on their mobile and connected devices for $4 per month. Some of the content available for this price includes SiriusXM’s more than [...]

  • Demi Lovato

    Demi Lovato Joins Netflix Comedy 'Eurovision'

    Demi Lovato has joined the upcoming Netflix comedy film “Eurovision.” Will Ferrell, who co-wrote the film with Andrew Steele, announced the news Tuesday with an Instagram post, in which he wished Lovato a happy birthday with a “homemade” cake. Following the announcement, Lovato can be seen blowing out candles on the cake next to a “Eurovision” [...]

  • Queen and Adam Lambert Live

    How the Queen + Adam Lambert Tour Brought the Opera to Arenas

    Just as “Bohemian Rhapsody,” the biopic of late Queen frontman Freddie Mercury, wowed moviegoers last year, stage design firm Stufish Entertainment Architects has helped Queen + Adam Lambert’s current U.S. tour deliver a screen spectacular of its own. The tour, which plays New Orleans on Aug. 20 and Atlanta on Aug. 22, touched down at [...]

  • Mass Appeal and Universal Launch Hip-Hop

    Nas, Mass Appeal and Universal Music Launch Hip-Hop Label in India, Sign Divine

    Mass Appeal and Universal Music Group today announced the launch of Mass Appeal India – a new label dedicated to amplifying India’s burgeoning hip-hop culture on a global scale. The new label’s operations will be based Universal Music India’s headquarters in Mumbai and will function as a multi-channel partnership between the two companies. According to the announcement, Mass Appeal India will sign and [...]

  • Trey Anastasio of Phish performs at

    Phish Concert Camp Out Canceled Due to Plague-Infected Prairie Dogs

    The plague, or Black Death, decimated the European population in medieval times and has returned to ruin Phish concert-goers’ camping plans. The band announced Tuesday that camping and vending will be canceled for their Labor Day weekend performance at Dick’s Sporting Goods Park in Commerce, Colo. due to concerns of plague-infected colonies of prairie dogs. [...]

  • Songs for Screens Powered by Mac

    Songs for Screens: 'American Horror Story' Makes 'Suddenly Last Summer' Sizzle Again

    FX Network’s “American Horror Story” returns for a ninth season next month, and promos for the next chapter of the anticipated series, dubbed ‘AHS 1984,’ have been airing frequently across cable television throughout August. In the short yet effective spot (see below), the Motels’ melancholic, moody “Suddenly Last Summer” plays as aerial footage of an [...]

More From Our Brands

Access exclusive content