Issue 287,  published January 5, 2021

Amazon to acquire Wondery

This officially puts a bow on what the Wall Street Journal reported in early December.

Right before the new year, the Bezosian mothership announced its intention to purchase Wondery, the podcast publisher known for its pulpy offerings that also stands as the last big buyable podcast asset of this past generation. The company’s been in the headlines over the past few months as it sought to cultivate an acquisition market for itself, but it’s also been in the news recently for the legal fracas surrounding its founder, Hernan Lopez, a former Fox International executive who was charged last spring by the US attorney’s office in the Eastern District of New York with being part of a major corruption scheme involving global soccer broadcasting rights. Lopez has denied all charges. The case is still on-going.

The acquisition price was not formally disclosed, but a source told the Journal that “it was about $300 million.” The Journal also reported that Lopez will be leaving the company he founded after the deal closes, presumably answering the question of what Amazon thinks about Lopez’s legal situation, after which he will focus on his new family foundation. Wondery’s chief operating officer, Jen Sargent, will take over the company upon Lopez’s departure.

Let’s switch over to Amazon. The acquisition announcement noted that Wondery would be sorted into the Amazon Music division, an addition that comes only three months after the platform first started adding podcast distribution to its offerings. Keep in mind: Amazon Music isn’t the only media division in the Amazon octopus to dabble in podcasting. Its towering audiobooks service, Audible, has long maintained an on-again off-again relationship with podcasts or podcast-like products. For what it’s worth, there doesn’t seem to be much of a master plan here. Instead, the situation looks purely like an opportunistic spaghetti-on-the-wall measure, a gambit to set some assets in place and see what happens.

What does Wondery give Amazon Music? As I’ve written previously, what Wondery brings is scale of reach, at least in theory, though it’s interesting to qualify that the nature of that reach currently only realizes itself over the existing podcast distribution ecosystem. One assumes that part of the point of Amazon Music absorbing Wondery is to increase the former’s key platform metrics, whether it’s user base or time spent on the platform. After all, the fundamental need for Amazon Music is to stay competitive with audio streaming platforms like Spotify and Apple Music. As such, the first defining puzzle for Amazon Music is to figure out how to extract value from Wondery for its own platform gains in this context — in other words, how to convert Wondery’s fans into Amazon Music devotees. (Insofar as there are “Wondery fans,” of course. Presumably, this is where Wondery’s adventures with app-specific premium subscriptions came in handy.) This conversion effort might mean eventual program exclusivity, but it might very well mean something else. We’ll see what the Amazon Music team tries out.

There’s also the whole thing about Wondery’s other major calling card: its aggressive participation in the podcast-to-Hollywood intellectual property pipeline. I struggle to see how that amounts to anything more than a mild value-add for Amazon Music. Again, we’re talking about Amazon, whose sprawling tentacles include multiple existing positions through the film and television business. So, while one could theorize that there are possible and interesting direct integrations between Wondery’s podcast properties and the Amazon Prime originals business, that IP dimension still feels like stuff Amazon doesn’t actually need in the first place.

I hear what some of you are asking: does all this really add up to $300 million-worth of a payout? Well, that’s never been the framing for this kind of thing. Spotify didn’t pay $230 million to buy Gimlet for what it was, but for what the platform hoped it would become and for the statement it’s making when that much money is whipped out for that new thing.

Plus, it’s not like $300 million is too taxing for Amazon, one of the few companies propping up the S&P 500 in a period of immense financial catastrophe.

I run this thing.