Setting the Odds of a Wondery Sale

By Nick Strann | 4 Minute Read

By Nick Strann | @nstrann | 3 min read

Over the past two years, consolidation has reshaped the “very hot right now” podcasting industry as Gimlet, Parcast, the Ringer, Stitcher, Serial, and many others have been fought over by legacy media incumbents. Now, few highly valued independents of the same audience and library scale remain, with Wondery top amongst them.
It seems that will soon change. According to a recent Bloomberg scoop, Wondery “has hired financial advisers to explore strategic options, including a potential sale.” The question therefore becomes – who will pony up the reported $200M+ (and rumored to be closer to $300M+) price tag that Wondery is asking for? If John’s recent Sports Gambling primer didn’t make it clear, we are betting men here at Spotlit. So let’s take a look at the list of usual (and not so usual) suspects and set the odds accordingly.
The Major StudiosOdds – 3 to 2
Compared to the more obvious audio companies on this list (see below), the Major Studios (Disney, Warners, Paramount, Sony, Universal, Netflix, etc) might seem out of place. But make no mistake – Hollywood’s appetite for audio content has been rapidly accelerating. Many of the studios have already made moves – Universal’s launch of UCP Audio, Warners’s DC comics deal with Spotify, etc… – but of all these legacy players, Sony stands out as the most likely to take a swing. We know that Sony seriously evaluated a purchase of Stitcher earlier this year but backed off due to the price tag. Buying Wondery is a different conversation. Unlike Stitcher, whose business is heavily reliant on ad sales representation, Wondery largely owns its IP, allowing the company to leverage its content as valuable source material for upstream adaptation. That distinction reframes a potential purchase – from a bet on the growth of the Podcasting market to an investment in IP that will fuel Sony’s flywheel across its Film, TV and even gaming divisions. Throw in the potential leverage that an acquisition could grant Sony Music in future audio platform negotiations and you have a textbook synergy play that will be hard to resist 
Spotify: Odds – 5 to 1
Far and away the biggest spender to date, Spotify has continuously leveraged M&A and exclusive content deals to grow its share of the podcasting market, so it would be foolish to count them out entirely. However, this track record speaks both for and against the probability of the platform adding Wondery to its ranks. Yes, a purchase here would create an unmistakably compelling value proposition for podcast consumers, especially for international first adopters considering Wondery’s efforts to localize its formats. Yet you have to wonder if investments of this size have reached a point of diminishing returns for the platform. Does Wondery’s content differ from Gimlet’s, Parcast’s, and The Ringer’s to such an extant that a purchase would drive meaningful growth in consumption? Our hunch is that it wouldn’t. Spotify will no doubt do their diligence and possibly put a bid in here but, in a competitive situation, we see them bowing out should the price go up.
AmazonOdds – 7 to 1
Now that Amazon Music and Audible are distributing and developing their own podcast content on their respective platforms, Wondery will undoubtedly seek to tap into Amazon’s deep pockets. Yet historically, Amazon has been more inclined to hire creative talent then to acquire creative companies (you have to go back to Audible’s 2014 acquisition of comedy service Rooftop Media to find a comp and even that’s a stretch.) There’s also the question of how Wondery+ would sit alongside Amazon’s existing podcast products. Sure, Wondery+ could be spun down quickly but even a small amount of added brand confusion here could cannibalize crucial year one growth of these new products. All in all, it feels too early and the ROI too uncertain for Amazon to step in here. But then again, what’s $200-300M to a company valued at $1.6T.
Liberty Media (SiriusXM, iHeart, LiveNation): Odds – 10 to 1.  
While Spotify and Apple have received the lion’s share of the audio hype, Liberty Media has quietly built a far-reaching position in the market – including stakes in live (30% stake in Live Nation), streaming (Pandora, Stitcher, JioSaavn) and broadcast (Sirius, iHeart) firms. Add Wondery’s library to that portfolio (we’d argue that Wondery’s premium doc content speaks to a different audience than Stitcher’s primarily comedic fare) and Liberty will be primed to offer a comprehensive solution to ad partners that even Spotify and Amazon will be hard pressed to match. That said, our friends at SiriusXM have suggested that after the Pandora and Stitcher acquisitions – another big ticket, high multiple purchase is a long shot. Leadership is still trying to figure out exactly how podcasting will fit in with the broader organization and the plan to invest deeper into iHeart will likely take precedence.
AppleOdds – 20 to 1
We’ve said this before, and we’ll say it again – we just don’t see Apple making any near-term content acquisitions in the podcast space. The recent news that Apple quietly purchased Scout.FM earlier this year further cements our perspective – Apple’s key objective is acquiring proprietary technology that can be leveraged in the Apple Podcast app. If Wondery had built its Wondery+ product with some differentiating tech, then MAYBE the tech giant would put in a decent bid. But that’s not the case. Wondery is the definition of a content play and for all the reasons we’ve laid out in the past – Apple won’t be the ones to pull the trigger at the premium valuation that Wondery is looking for.