Amazon buying Audible.com for $300M to expand audio content

SEATTLE — Web retailer Amazon.com Inc. said it will buy online audio book seller Audible Inc. for $300 million in a bid to expand its reach in digital audio content.

Amazon said Thursday that it agreed to buy Newark, N.J.-based Audible for $11.50 per share, a 23 percent premium over Wednesday's closing price.

Audible's catalog includes about 80,000 audio books, radio programs, spoken word selections and other digital content for download.

Amazon and Audible have been partners since 2000, when the companies, with Microsoft Corp., launched an e-book and audio-book store on Amazon.com. Company executives would not comment Thursday on whether the partnership, which adds links to Audible on some Amazon book pages, has been financially successful. The executives did not detail any future plans, and said Audible's brand and Web sites will continue to operate.

In the last year, Amazon has bulked up its own digital content offerings, which include the Unbox movie download service, an MP3 music store and Kindle, the retailer's e-book reader and accompanying store, which stocks 90,000 books, newspapers and other content and can play Audible files.

Increasing the amount of digital content Amazon sells will help the company improve margins — the weak spot in Wednesday's earnings report that spooked Wall Street into an after-hours sell-off of the company's shares.

Amazon's shares posted a nearly 5 percent gain in the wake of the acquisition news, even though analysts said the Audible deal itself isn't likely to make much of a dent in the margin woes in the near term.

"I don't think it makes a big difference any time soon, just based on Audible's size," Global Crown Capital analyst Martin Pyykkonen said in an interview. "This business of digital audio books has grown, certainly, but it hasn't taken off."

Audible hasn't seen a profitable quarter for more than a year, despite its role as exclusive provider of audio book and other spoken-word content to Apple Inc.'s iTunes store, which accounted for nearly a third of its revenue in the third quarter of 2007. The buyout won't affect Audible's agreement with Apple, which is set to expire in late 2010, according to Audible Chief Executive Donald Katz.

Scott Kessler, an equity analyst with Standard & Poor's, said Audible may have been attractive to Amazon since it has upgraded its technology infrastructure, and focused more on long-term members instead of shoppers who make only occasional purchases.