AMZN Amazon.com Inc

By Benjamin Mullin and Anne Steele 

Amazon.com Inc. is in exclusive talks to purchase podcast startup Wondery, according to people familiar with the matter, as the tech giant pushes further into the growing audio sector.

The talks value Wondery at over $300 million, the people said. Wondery's last funding round, in June 2019, valued the company at $100 million, The Wall Street Journal reported.

The company is on track to increase revenue to more than $40 million this year, according one person familiar with the matter, with about 75% of that coming from advertising and the rest from licensing to TV, to subscription services like Audible and Stitcher Premium and to Wondery's own premium subscription service, which launched this summer.

The deal talks are continuing and negotiations could still fall apart, the people said.

Closely held Wondery is the last large, independent podcaster on the market -- and could present the final opportunity for a major tech or media giant to buy its way into the exploding field. Wondery's investors include venture-capital firms such as Waverley Capital, Lerer Hippeau Ventures, Greycroft Partners and Advancit Capital.

Amazon's foray coincides with a growth spurt for the small but rapidly expanding podcasting industry. Once the domain for super-niche fare, true-crime content and pop-culture dissections, the format has exploded in recent years as a destination for high-profile entertainment and political programming. Podcasting as a whole is attracting over 100 million monthly active listeners, according to Edison Research.

U.S. ad revenue from podcasts, meanwhile, rose an estimated 48% to $708.1 million last year, according to the Interactive Advertising Bureau, and is projected to exceed $1 billion by 2021.

Major players in the tech and media sectors have acquired several other podcast startups in recent years. Spotify Technology SA bought Gimlet Media, a maker of narrative podcasts, in 2019 for more than $200 million. New York Times Co. in July said it would acquire Serial Productions, maker of the hit podcast "Serial," in a deal that could be worth as much as $50 million depending on milestones and performance metrics, the Journal reported.

Wondery, which is known for true-crime podcasts like "Doctor Death," "Dirty John" and "Over My Dead Body," was the sixth most-popular podcast publisher in the U.S. in September, according to audio analytics firm Podtrac, with more than 60 million downloads and streams of its shows. Publishers ahead of Wondery included NPR, iHeartMedia Inc. and the New York Times.

Like many of its peers, Wondery has benefited from the growth of podcasting among listeners and advertisers. Wondery generates revenue from advertising and licensing fees as well as from optioning the rights to its podcasts to media companies like AT&T Inc.'s WarnerMedia and Walt Disney Co.

Amazon Music moved into podcasting in September, looking to draw new listeners with 70,000 titles to start, including new original, exclusive shows hosted by DJ Khaled, Becky G, Will Smith and Dan Patrick.

The tech giant has some catching up to do with Apple Inc.'s Apple Podcasts, where most podcast listeners tune in free, and Spotify, which has been investing hundreds of millions of dollars in the format and sparked an arms race for programming and talent.

While Amazon is joining a competitive field, executives have said the service can tack differently from rivals -- as it has with music streaming -- and bring in new podcast listeners, particularly through its voice-activated home speakers. Amazon has the third-largest music service by subscriptions, behind Spotify and Apple Music, and has drawn an older listening base across the U.S., in part through the help of its Prime subscription service and Echo speakers.

Write to Benjamin Mullin at Benjamin.Mullin@wsj.com and Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

December 02, 2020 17:08 ET (22:08 GMT)

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