Amazon (NSDQ: AMZN) is pushing further into downloadable media: the company is acquiring spoken-word digital audio firm Audible (NSDQ: ADBL) for $300 million or $11.50/share, a premium of more than 22 percent from yesterday’s closing price. The acquisition, which comes a day after Amazon reported quarterly numbers that disappointed Wall St., is subject to the typical hurdles, but is expected to close in Q2. Audible, founded in 1997 by Donald Katz, and its subsidiary Audible.co.UK offer almost 200,000 hours of audio content from more than 520 content partners sold either a la carte or, more typically, through a monthly or annual subscription membership plan. Release.
Staci adds: Nearly one-third of Audible’s revenue comes through Apple; it is the top spoken-word provider for the iTunes Store with a contract to be the exclusive audiobook provider through Sept. 30, 2010. In Q307, iTunes accounted for 29 percent of Audible’s $27.6 million revenue and Audible execs expected a “great” Q4. It now will be owned by the company quickly becoming one of the iTunes’s major competitors as Amazon expands its DRM-free MP3 offerings.
Audible’s revenue overall has been increasing but the company has also had a string of net losses and has long been a good candidate for a strategic acquisition with Amazon as a possible buyer. Just last month, long-time investor Apax Partners and its affiliated funds started to divest its 23-plus percent holding.
Kindle: Amazon’s e-book reader Kindle already comes with audio capability so it doesn’t take a stretch of the imagination to expect wireless audiobook downloads.
React: David Joseph, who was a senior executive at Audible before moving to Morgan Stanley as an analyst, told me it’s a “win/win” and good for Audible, Amazon and the digital audio content industry. “[It] marries Audible’s wide selection of digital audio content and strong relationships with publishers with Amazon’s best-in-class customer focus and experience. Kindle will benefit from wider selection of content and Audible content gains a significant distribution channel (downloading audio content wirelessly just became easier).” Joseph does not own any stock in the companies.
Disclaimer: Our investor Alan Patricof served as one of Audible