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Audio entertainment giant SiriusXM has struck a deal to acquire podcast platform Stitcher from E.W. Scripps Co. for up to $325 million.
The acquisition gives the satellite radio company, which also owns music streamer Pandora and a stake in SoundCloud, a foothold in the burgeoning podcast business, which is led by rival-in-audio Spotify. The companies announced the deal Monday.
At the closing, SiriusXM, controlled by john Malone’s Liberty Media, will make a cash payment of $265 million to Scripps. SiriusXM will also potentially make up to $60 million in additional contingent payments based on Stitcher achieving certain financial metrics in 2020 and 2021, the companies said.
The transaction is expected to close in the third quarter.
In addition to the Stitcher app, the company also encompasses advertising arm Midroll Media and podcast network Earwolf, which is behind such shows as Scott Aukerman’s Comedy Bang! Bang! and Office Ladies. The executive team has years of podcasting experience, which can help boost SiriusXM’s know-how in the burgeoning field.
The deal follows SiriusXM’s mid-June purchase of podcast hosting and distribution company Simplecast, which works with clients like Netflix. Sirius — which serves as the exclusive home to Howard Stern — grew its podcast business with the 2019 acquisition of online radio platform Pandora, which allows podcasters to upload their shows for distribution among its 61 million monthly listeners.
Stitcher launched in 2008 to offer an alternative to Apple Podcasts. After a brief period under Deezer ownership, Scripps acquired the company in 2016.
The podcast industry has changed dramatically in the last few years following the entrance of music streaming company Spotify, which has scooped up podcast studios Gimlet, Parcast and The Ringer and landed exclusive streaming rights to several high-profile shows, including The Joe Rogan Experience. Now, industry observers largely view the podcast landscape as a two-platform race between tech giants Spotify and Apple.
Stitcher’s app, which offers more than 100,000 titles, serves as an alternative to Spotify or Apple Podcasts. A premium version of the app, which costs $5 per month (or $35 for the year), removes the ads and features exclusive and early-access programming.
Scripps’ Stitcher division brought in $17.1 million in operating revenue for the first quarter of the year, up 13 percent from the same period a year earlier.
Scripps has been looking to offload Stitcher for some time as it faces pressure in its core local television business. But the once-frothy podcast market has been weathering its own rocky period as the novel coronavirus pandemic caused a softening ad market and a decline in listenership. (Both seem to have returned to relatively stable levels as the shutdown has continued.) Sources tell THR that Sony Music also looked at Stitcher, which was hoping to fetch around $300 million for the sale.
SiriusXM said after the deal close its combined properties “will contain the largest addressable audience in the U.S. across all categories of digital audio – music, sports, talk and podcasts.” It will also further extend the firm’s reach in the digital audio ad marketplace. “The SiriusXM and Pandora owned-and-operated digital platforms, combined with the company’s exclusive ad sales arrangement with SoundCloud for the U.S., and the Stitcher and Midroll networks that are subject to the agreement, will reach over 150 million listeners,” the company said. “SiriusXM will be better positioned to advance the podcast ad market and help solve some of its critical challenges through precision targeting, ad efficiency, and improved measurement capabilities via a streamlined ad marketplace.”
Said SiriusXM CEO Jim Meyer: “The addition of Stitcher is an important next step as we continue to develop and strengthen our offering in the fast-growing podcasting market. “With Stitcher, we will expand our digital audio advertising presence and look to generate new ways for creators to find and connect with their audiences. Stitcher has a talented team with deep experience in the podcast space, and we look forward to working with them to better meet the needs of creators, advertisers and listeners.”
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