Swedish audio streaming giant Spotify deepened its foray into the podcasting industry with a deal to acquire the Ringer, the Los Angeles-based network of entertainment, sports and pop culture podcasts founded by Bill Simmons.
Simmons, a former writer and commentator for ESPN known for his irreverence, founded the business in 2016 that reportedly reaches an audience of 14 million users a month.
Terms of the deal, announced Wednesday morning, were not disclosed. Spotify said it expects to close by the end of the first quarter.
The deal is the latest move by Spotify to expand into the podcast space. The company spent nearly $400 million to acquire three podcast companies last year, including New York-based Gimlet Media and L.A.-based Parcast, which are creating exclusive content for Spotify.
Executives at New York-based Spotify have expressed a desire to expand audio streaming offerings beyond music.
The Ringer will immediately give them a slate of established programs including “The Bill Simmons Podcast,” “The Rewatchables” and “The Ryen Russillo Podcast.” It also offers video discussion “after shows” for fans of popular TV series such as HBO’s “Game of Thrones.”
“We look forward to putting the full power of Spotify behind the Ringer as they drive our global sports strategy,” Spotify’s chief content officer, Dawn Ostroff, said 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.”
Since she took over her post in 2018, Ostroff has been building an arsenal of podcasts to help the company be a leader not just in music but also audio storytelling. Podcasts are seen as a key way to attract new listeners and increase the amount of time people spend on the platform.
Under her watch, the number of podcasts available on Spotify has grown to more than 700,000 titles, up from 185,000 in February 2019.
“Becoming the most listened-to audio network means that we needed to expand from just being a music platform to incorporating other types of audio, entertainment and information on the platform,” Ostroff told The Times last year. “Podcasts have started to really take off.”
The music streaming service has 124 million paid subscribers and 271 million active users in 79 markets.
Spotify, which has a large office in downtown L.A., expects that eventually roughly 20% of listening on its platform will not be music. On Wednesday, the company said 16% of its monthly active users were listening to podcasts.
Revenue grew 24% to $2.4 billion in the fourth quarter. The company reported a net loss of $230 million, due to a higher-than-expected increase in social charges, or payroll taxes associated with stock-based compensation in countries such as Sweden.
Spotify faces stiff competition from Apple, which has offered podcasts on its platform since 2005. Other competitors include rival Pandora and venture capital-backed start-ups such as Luminary that have also created their own libraries of exclusive content.
Podcasts were expected to take in $514.5 million in ad dollars in 2019, up 28% from 2018, according to Interactive Advertising Bureau and PwC. There are already more than 750,000 podcast shows globally on the Apple Podcast app, one of the most popular outlets for podcasts.
Rapid growth of the podcast industry has made it a target for union organizing. Last summer, workers at the Ringer joined the Writers Guild of America East and management moved quickly to recognize it, although tensions surfaced as the sides sought to negotiate a new contract.
“We look forward to hearing from them about how this transaction will affect our day-to-day work,” the Ringer Union said in a statement. “We expect management to meet promptly with the bargaining committee to discuss these matters.”
On Wednesday morning, Simmons tweeted that the Ringer will remain the Ringer “in every respect” after the Spotify acquisition.
“They appreciate what we do and they want us to be us,” he tweeted.
Spotify stock was down about 5% to $147.24 a share on Wednesday morning.
Times staff writer Wendy Lee contributed to this report.