Amazon Takes Podcast Wars to Local Sports and News

You can't go a day now without a new story about the podcast arms race, and it was only a matter of time until Amazon entered the fray. Whereas Spotify is going at it thus far from a national perspective -- buying The Ringer, and licensing Joe Rogan's podcast in a pair of nine-figure deals -- Amazon is going to make a run at capitalizing on sports and news in local markets, Sara Fischer reports for Axios.

The story notes that local advertising is a $150 billion per year industry, of which audio adds up to about 10 percent -- overwhelmingly, local audio advertising is dominated by radio. Thus, local news and sports podcasts were an inevitable frontier, and it would hardly be surprising if we hear about other big entities besides just Amazon jumping into these waters.

Acquisitions?

How Amazon will go about executing this strategy is fascinating. My first thought was why don't they just go and buy iHeart, Cumulus, and/or Entercom? Amazon's market capitalization (how much the company is worth) is about $1.2 trillion. iHeart's is about $521 million, Cumulus's is $82 million, and Entercom's is $234 million. Combined, those three radio companies are worth less than $800 million, and they combine to own over 1,500 radio stations nationwide. Those three companies also own the most stations in the biggest markets.

While there would be anti-trust hurdles and these companies have a lot of debt, Amazon could acquire a dominant market share of local news and talk for the equivalent of pennies to them (the company has nearly $50 billion in cash). Further, iHeart and Cumulus both already have formidable standings in the podcast market:












Note that this list excludes brands like The Ringer that do not sign up to have their podcasts tracked by Podtrac.

Direct hires?

 

Another strategy Amazon -- or others -- could deploy is similar to what The Athletic did to newspapers: Just go region by region and pluck the best talent. Here, big players could forgo the debt loads and large fixed costs that would come with buying legacy radio brands, co-opting the listenership of the most significant news and sports voices. This comes with a little bit of risk as not everyone's audience is portable across new mediums -- for example, Mike Francesa has not had as much relevance streaming on Entercom's digital property as he did over the years on WFAN's airwaves.

There is also a question of whether and to what extent Amazon, and the inevitable other players in this realm, want personality with their sports and news. Pure information has a ceiling as to how much audience can be engaged. The most galvanizing personalities are also the most polarizing in radio. This is especially true in news, where hard red or hard blue commentary accumulates bigger reach in a fragmented marketplace, and it's also the case in some regard in sports.

Bottom Line

Whether Amazon opts to acquire legacy media brands or go for the jugular in talent, this is a media story that is obviously worth watching. These big tech players are coming at audio with deeper pockets than we've seen in radio, and it promises to be a windfall for the most prominent voices in sports and news media.

Disclosure: Outkick's founder Clay Travis is an on-air talent for iHeart's Fox Sports Radio.















Written by
Ryan Glasspiegel grew up in Connecticut, graduated from University of Wisconsin-Madison, and lives in Chicago. Before OutKick, he wrote for Sports Illustrated and The Big Lead. He enjoys expensive bourbon and cheap beer.