How an Ex-21st Century Fox Executive is Going Big in the Podcast Space

Walking away from a high-octane job at the helm of a $3 billion business to launch a new venture – in a fledgling industry still in its Wild West days – would be considered a pretty big leap by most.

Not by Hernan Lopez’s account.

A bigger leap eclipsed his exit as CEO of Fox International Channels, the global entertainment unit of 21^st Century Fox where he’d built an 18-year career. When Lopez decided to leave the multimedia giant in 2016 to create Wondery, the fastest-growing and now largest independent U.S. podcast publisher, he took on a bigger risk: he bet big on consumers’ appetite for original content.

“Let me explain,” Lopez told CO—. “Every media company usually starts with a combination of shows that are licensed and produced by others, and [original content] made by them. More often than not,” he said, “the ratio is tilted toward licensed because of its lower risk-to-reward ratio.” That’s understandable. Licensed content carries less financial and creative risk because it has already been developed and has a track record with an audience, a following. That same dynamic explains why rock bands perform crowd-pleasing cover songs rather than original compositions of their own.

Lopez rapidly shifted the mix of programming from 10% original and 90% licensed content at Wondery’s launch three years ago to a 50%-50% split today. Yet, more original content is in the pipeline this year, propelled by momentum in 2018 when Wondery claimed eight No. 1 hit shows as charted by Apple Podcasts and the most downloads among 2018 new shows as ranked by Podtrac. Wondery was also just named the sixth most innovative media company of 2019 by Fast Company.

“Original content that is distinct is brand-defining and becomes a larger part of the mix,” Lopez said pointing to the success of Netflix and HBO original programming. “That progression is true for Wondery. I knew at the beginning, when I started the company, that would be the progression. The creative risk that we took at Wondery played out as anticipated.”

A soaring $314 million podcast industry

“When I started,” he continued, “the whole industry was less than $200 million” in podcast ad revenue. While U.S. podcast ad revenue grew to $314 million in 2017, according to a report by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC), that figure pales against TV’s $70 billion and radio’s $16 billion ad revenue. IAB and PwC project U.S. podcast revenue will double to $659 million by 2020.

With Wondery, Lopez set out to deliver a new audio experience using an immersive storytelling style backed by rich audio production – such as lush music scores and dramatic sound effects – the sensory flourish viewers expect with TV and movies but not with radio.

“We found a formula for producing a show that sounds very different from anything else,” Lopez said. “It’s very immersive.” Some Wondery podcasts, such as “Imagined Life,” feature a unique narrative technique that puts the listener at the center of the story – into the shoes of the protagonist – to make the story more personally relatable and help listeners empathize with the central character.

Breakout originals from Wondery include “Dr. Death,” a six-episode series that explores the true story of a Dallas neurosurgeon whose gross negligence maimed and killed his patients while a pass-the-buck healthcare system cloaked his crimes. “Dr. Death,” developed in partnership with The Los Angeles Times, was ranked the No. 1 new podcast of 2018 by Podtrac, which tracks podcast downloads. Wondery’s “Gladiator” claimed the No. 2 spot, ahead of podcast shows from bigger, established publishers like PRX, iHeartRadio and MSNBC.

Wondery’s portfolio of 82 podcast shows (so far) spans genres of fiction and true crime thrillers to business, personal growth and history. Podcast hosts, narrators and writers are often veteran investigative journalists who know the subject matter intimately and command credibility. The Los Angeles-based company added staff and expanded programming with the help of $5 million raised last year.

Dissecting a chosen topic via long-form narrative storytelling is not only engaging from an entertainment standpoint, it is also instructive and applicable to listeners' daily lives, Lopez told CO—.

“I believe every reader of CO— should listen to ‘Business Wars,’” he offered. “You learn about business and you are thoroughly entertained.” Wondery’s “Business Wars” podcast series chronicles rivalries such as Nike/Adidas, Coke/Pepsi and McDonald’s/Burger King, taking listeners behind the scenes to get an insider’s view of the underlying dynamics, personalities, squabbles and market forces at play between high-profile business rivals.

“When you listen to multiple episodes, you can see various patterns of how companies use their skill sets and their strengths to best their competitors,” Lopez said, “and you can see how executives and owners can be their own worst enemies.”

He cites “Netflix vs. Blockbuster,” the eight-part Wondery podcast series, as a compelling and cautionary tale relevant to businesses of all kinds. One episode features a re-enactment portraying how Blockbuster activist shareholder, Carl Icahn, undermined Blockbuster CEO John Antioco, who was trying to create a digital video service to compete with Netflix. A proxy fight ensured, Antioco exited and Blockbuster focused on physical stores over digital before it faltered, declared bankruptcy and closed stores. Meanwhile, the market value of Netflix, which Blockbuster could have bought for a modest $50 million, would grow to $138 billion last fall.

“Icahn did not see eye to eye with Antioco,” Lopez said. “The rest is history. We see this play throughout time. What it says is that company owners and company managers should pay attention, first and foremost, to the marketplace, the other products and their teams offerings,” Lopez told CO—. “They should not ignore the perils of putting personal preference ahead of business interest.”

The latest from Wondery was the February 12, 2019 premiere of “Over My Dead Body,” a mini-series that Lopez hopes will achieve the popularity of “Dr. Death” and “Dirty John,” two wildly successful Wondery audio podcasts that drew attention from major TV studios: “Dirty John” was turned into a scripted TV series on Bravo, starring Connie Britton and Eric Bana, while TV adaptations of “Dr. Death,” “Business Wars” and “Gladiator” are in the works.

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