Amazon's Eyeing Up A Podcast Deal And Macquarie's Buying An Investment Management Firm

Amazon's Eyeing Up A Podcast Deal And Macquarie's Buying An Investment Management Firm

about 3 years ago3 mins

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Amazon knows all, sells all, and streams all: the Everything Store is reportedly thinking about expanding its podcasting business 🎙

What does this mean?

Amazon’s looking at spending $300 million on Wondery, a venture capital-backed US podcast network that’s expected to generate $40 million in revenue this year. Three-quarters of that will come from advertising, and the rest a mix of licensing and Wondery’s own subscription fees.

Not that the industry’s completely new to Amazon: the tech giant launched a podcast business in September that boasted 70,000 shows, including exclusive ones from the likes of DJ Khaled and Will Smith 👀 It’s all part of an empire that includes music and video-streaming, as well as an advertising arm that’ll probably make $20 billion worth of sales this year.

Why should I care?

The bigger picture: Listen closely.

Podcasting’s become big business: the Interactive Advertising Bureau has estimated that revenue from US podcast advertising rose 48% to over $700 million in 2019 – and that it’ll top $1 billion next year 💵 And with more than 100 million estimated monthly listeners, everyone from advertisers to startups to investors is getting in on the action. Podcasts are becoming so big, in fact, that Spotify reckons they and other non-music content will eventually make up 20% of what’s streamed on its platform.

In 2019, US podcast advertising revenues grew 48% to $708 million
Source: Interactive Advertising Bureau

For markets: The hare and the Bezos.

Both Apple Music and Spotify – which spent over $200 million buying podcast companies Gimlet and Anchor last year – have more subscribers than Amazon’s audio business does 🎧 But the ecommerce giant has good reason to believe it’ll catch up at some point: it has a history of winning over rivals’ customers by being willing to lose money on new businesses for a long time. That could be a big problem for Apple and Spotify, both of which are increasingly reliant on the very same subscription revenue that podcasts help them sustain.

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Macquarie Is Buying An Investment Management Firm

Macquarie image

Australian investment bank Macquarie announced it was treating itself to the acquisition of US investment management firm Waddell & Reed Financial on Thursday – and it’s not the only one splurging this holiday season… 🎁

What does this mean?

The $2 billion purchase will catapult Macquarie’s investment management business into the US’s top 25 mutual fund managers based on the $465 billion it’ll look after. And to earn that privilege, Macquarie’s paying almost 50% more for each share of Waddell & Reed than they were worth at the start of the week.

Waddell & Reed has been hemorrhaging client cash
Source: Bloomberg

There must be something going round, because private equity-focused investment firms Dyal Capital Partners and Owl Rock Capital Partners are discussing their own merger – not just between the two of them, but with a special-purpose acquisition vehicle (SPAC) too 🧐 That would automatically list the combined company – which would look after almost $50 billion – on the stock market, as well as give it a valuation of about $13 billion.

Why should I care?

Zooming in: Ctrl, alternative, delete.

Investors have increasingly been pulling their cash out of pricey and underperforming “active” funds in favor of low-cost “passive” funds that don’t require much tinkering. That’s come as a blow to investment managers, which can’t charge as much if there’s less for them to do 🛠 Those that specialize in alternative funds, meanwhile, are probably better off: risky investments like private equity funds currently offer better returns than your garden-variety stock and bonds.

Cumulative net inflows over the past decade, bonds and equities ($ trillion)

The bigger picture: Mo’ mergers, mo’ money.

The reason for this spate of deals in the investment management industry is pretty straightforward: the more money an investment manager looks after, the more profitable it should be 📈 That’s because more so-called “assets under management” means more fees, even as costs – like analysts and technology – stay put. That extra profit should, Macquarie and the newly formed Dyal-Owl Rock hope, help them get bigger, faster – and boost their values.

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