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Spotify Buys Podcast Ad-Tech Firm Megaphone for $235 Million in Cash

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Spotify, keeping the pedal to the metal in its aggressive podcast buildout strategy, has acquired podcast publishing and advertising company Megaphone for $235 million in cash.

Spotify is buying Megaphone, formerly known as Panoply Media, from media company Graham Holdings. Megaphone provides podcast hosting and ad-insertion capabilities for publishers and targeted ad sales for marketers.

According to Spotify, the acquisition of Megaphone will allow the companies to make dynamic streaming ad insertion available to third-party podcast publishers for the first time. The deal comes after Spotify launched the proprietary Streaming Ad Insertion (SAI) system earlier in 2020, which lets advertisers buy targeted podcast spots on Spotify’s own platform. Advertisers will soon be able to buy spots across Spotify’s original and exclusive podcasts as well as across the Megaphone Targeted Marketplace.

“We are still in the early chapters of the streaming audio industry story, but it is absolutely clear that the potential is significant,” Dawn Ostroff, Spotify’s chief content and advertising business officer, said in announcing the deal. “We look forward to Megaphone joining Spotify on our mission to accelerate smarter podcast monetization for advertisers and podcast publishers powered by a scaled audience and state-of-the-art technology.”

Spotify has now shelled out more than $800 million over the last two years on podcast content and technology deals, as U.S. podcast audiences continue to swell. In 2019, the company acquired podcast studios Gimlet Media and Parcast, along with podcast self-publishing platform Anchor — paying nearly $400 million for them, with additional potential payouts over four years, according to regulatory filings. This year, Spotify bought Bill Simmons’ The Ringer podcast and media startup in a deal worth up to nearly $200 million.

Spotify’s acquisition of Megaphone comes after SiriusXM in July agreed to pay up to $325 million for Stitcher, which comprises a podcast listening app, original podcast networks and the Midroll Media podcast ad network, in a deal with E.W. Scripps Co.

Megaphone’s approximately 70 employees are all expected to receive job offers from Spotify. Megaphone is based in Reston, Va., with offices in New York, Chicago, San Francisco and Los Angeles. The deal is subject to usual regulatory approvals. For Graham Holdings, Allen & Co. advised on the sale process for Megaphone.

“We are incredibly excited to join Spotify to help advance the podcast medium for publishers and advertisers alike,” Megaphone CEO Brendan Monaghan said in a statement. “We believe that Megaphone and Spotify’s shared value in innovation will drive the podcast ecosystem forward around the world.”

Megaphone was founded in 2015 as Panoply Media, originally part of Graham Holdings’ Slate Group. In September 2018, Panoply laid off its editorial and direct-sales staff, ending production of original podcasts to focus on podcast ad-delivery and analytics technology. In March 2019, Graham Holdings renamed the division Megaphone.

Clients of Megaphone have included Spotify and Gimlet, iHeartRadio, Disney and Marvel Entertainment, ABC News, ESPN, the Wall Street Journal, Vox Media, Bloomberg, Meredith and Condé Nast.

Publicly traded Graham Holdings doesn’t break out financial results for Megaphone, which it calls “an investment-stage business.” The company said Megaphone’s revenues “increased significantly” in the first nine months of 2020; it recorded operating losses in the third quarter and first nine months of 2020 but Graham Holdings said those were down significantly from the prior year.

“Spotify will be a great home for Megaphone. I am proud of the Megaphone team and what they have built, and we look forward to their continued success,” Timothy O’Shaughnessy, president and CEO of Graham Holdings, said in a statement.

Graham Holdings, formerly the Washington Post Co., in 2013 sold the Washington Post to Amazon’s Jeff Bezos for $250 million.