Spotify is adding another prized asset to its growing list of podcast properties. The music streaming platform acquired the exclusive rights to The Joe Rogan Experience podcast and video-cast, which will debut on Spotify on September 1. Reports indicate the deal carries an exclusivity fee of more than $100 million, but financial details were not disclosed by either party involved.
The Joe Rogan Experience: with about 190 million monthly podcast downloads and an additional 10 million views through video-casts, Joe Rogan Experience is one of the largest podcasts in the world. JRE averages about 18 podcasts per month, ranging in length from 1 to 5+ hours, according to SunTrust Robinson Humphrey.
What it Means for SPOT: The deal puts Spotify in a position to increase its subscriber base and listener hours, and advance its data trove for its ad tech offering.
Impact: SunTrust Robinson Humphrey conservatively estimates “JRE should be a low-single-digit lift to 2021 total MAUs (~2%), subscribers (<1%), revenue (~2%), and gross profit (~2%).” STRH has a BUY rating and $167 price target.
Keeping an eye on margins: Wells Fargo Securities emphasizes that SPOT “remains a stock whereby investors are focused on gross and operating margins.” The firm says the deal would push SPOT back on its path towards 30% gross margins. Wells Fargo Securities has an UNDERWEIGHT rating and $130 price target.
Spotify’s recent acquisitions: Spotify has spent about $636 million on podcast assets since February 2019. Wells Fargo Securities estimates those properties will generate about $95 million in revenue in 2020.
Podcasting opportunity: Podcast advertising revenue is forecasted to exceed $1 billion by 2021. About half of the U.S. population has listened to a podcast at least once, according to Interactive Advertising Bureau.
Don’t Sleep on iHeartRadio: “If SPOT is the platform play, IHRT is the content play,” according to Wells Fargo Securities, which calls iHeartRadio its top audio idea. The firm estimates around $100 million in podcast publishing revenue this year, and points out that “IHRT also has some of the best margins in the industry.”
iHeartRadio acquired Stuff Media for $55 million in 2018. The podcast network is the publisher of HowStuffWorks and is behind shows such as Stuff You Should Know and Funny or Die.
