Libsyn Buys Ad Rep Firm AdvertiseCast; Raises $25 Million In New Funding.
The podcast hosting and distribution company Libsyn is looking to ramp up its advertising capabilities with a $30 million deal to buy the podcast rep firm AdvertiseCast. It sells inventory for more than 1,500 podcasts and Libsyn says its combination with Libsyn’s 75,000 hosted podcasts will accelerate revenue opportunities for podcast creators and provide advertisers with significant new inventory.
Libsyn President Laurie Sims says AdvertiseCast will “fit perfectly” with their existing Libsyn 5 hosting platform and its podcast catalog. “We expect to generate meaningful revenue by offering the AdvertiseCast solution to Libsyn’s customers and leveraging the combined inventory to attract even more advertisers to the AdvertiseCast platform,” she said in the announcement.
The addition of AdvertiseCast will also help address what has been a weak spot in Libsyn’s earnings reports in recent quarters. During the third quarter the company said its ad revenue was down 22% compared to the same period a year earlier.
AdvertiseCast’s self-serve marketplace sells advertising for mostly mid- and large-tier podcasters currently on its network. Since inception in 2016, AdvertiseCast revenue has grown rapidly, increasing 45% year over year in 2020 to approximately $12 million. The company is also operating in the black, having reached profitability without any outside investment.
“We founded AdvertiseCast with a podcast publisher’s mindset and believe it is a perfect fit with Libsyn’s creator-centric ethos,” said co-founders Trevr Smithlin and Dave Hanley in a joint statement. “Given the large growth in the podcasting market, we felt this was the perfect time to join forces with Libsyn in order to accelerate the growth of our business.” Even with their company’s growth, Smithlin and Hanley said they believe advertising remains a “very under-penetrated” segment of the podcast market. “We believe we are strongly positioned to ride the advertising wave with Libsyn’s support,” they said.
Under the terms of the purchase agreement, Libsyn will acquire all of the issued and outstanding membership interests of AdvertiseCast for a purchase price of up to $30 million, of which $18 million will be in cash, $10 million will be in newly issued Libsyn shares, and $2 million will be in the form of an earn-out, which is subject to the terms and conditions of the purchase agreement. Smithlin and Hanley will remain with the company and enter into employment agreements as a condition to closing.
“Since we began in 2004, our primary objective at Libsyn has been to enable independent podcasters by providing them with a strong set of tools to help them thrive,” said Sims. “AdvertiseCast expands our tool set to include a robust monetization solution that enables efficient host-read and programmatic advertising.”
Libsyn Raises $25 Million
Libsyn also disclosed Wednesday (March 31) that it had funding commitments of $25 million through a privately placed equity transaction with a mix of old and new shareholders. The financing round is being led by existing shareholder Camac Partners and new shareholder Hudson Executive Capital, among other existing and new investors. Proceeds of the transaction will be used primarily to fund the AdvertiseCast acquisition and to give Libsyn’s management team the resources to potentially make other strategic acquisitions. The company said it expects to close on the new financing during the second quarter, coinciding with the closing of the AdvertiseCast acquisition.
Investors signaled approval for the latest moves by the company. Shares of Libsyn’s stock jumped 8% in New York following the announcements.