Stitcher Sirius 375

SiriusXM now occupies a larger role in podcasting after it closed a deal on Monday to buy Stitcher from the E.W. Scripps Co. The $325 million deal includes the Midroll advertising rep firm; owned-and-operated podcast networks including the comedy-focused Earwolf; and the Stitcher podcast listening platform. The deal was first announced in July.

The sale price includes $265 million of cash with potential payouts of up to $30 million in 2021 and 2022, based on Stitcher’s financial results.

Scripps entered the podcasting business in 2015 when it acquired Midroll Media for $50 million and then followed that up with a $4.5 million deal for Stitcher in 2016. Since then, Stitcher’s revenue has grown at an average 52% rate between 2016 and 2019. Stitcher’s 2019 revenue was $72.5 million.

SiriusXM CEO Jim Meyer has said adding Stitcher will allow the company to offer a “one-stop shop” to create, publish and monetize podcasts. The deal will marry Stitcher’s podcast portfolio with SiriusXM’s growing podcast business, which already includes Pandora and its monetization platform AdsWizz and the recently acquired ad tech business Simplecast. When all the pieces are put together, SiriusXM says it 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.

"We are deepening our position in podcasting, the fastest-growing sector in digital audio, and with completion of this transaction, our vision is taking shape,” said SiriusXM CEO Jim Meyer in a statement. “With Stitcher and its varied assets, we are now a one-stop shop able to meet the needs of podcast creators, publishers and advertisers, while also providing listeners with access to great shows, series and programming."

Erik Diehn, CEO of Stitcher, will remain at the division and will report directly to SiriusXM President and Chief Content Officer Scott Greenstein, who also oversees content at Pandora. And Sarah van Mosel, Stitcher's Chief Revenue Officer, will also remain. She will report directly to John Trimble, Chief Advertising Revenue Officer of SiriusXM.

SiriusXM had largely remained on the podcast sidelines for the past several years. But ever since it acquired Pandora, it has opened itself up to the opportunities that on-demand audio offer. It followed that up with a $28 million deal in June to buy Simplecast, the podcast management and analytics platform. Its content management, audience analytics and audio tools dovetail with the monetization platform of Pandora-owned AdsWizz.

Scripps Still Owns Triton Digital

Scripps sold off its radio station business in a series of deals worth a combined $83.5 million during 2018. Its last audio piece is the Los Angeles-based digital audio technology and advertising company Triton Digital. Scripps CEO Adam Symson said earlier that the company had no immediate plans to sell Triton, calling it a “high margin contributor” to the company’s national media division.

“We expect to continue to offer Triton to service both the podcasting industry and the digital audio streaming industry,” he said on the company’s quarterly earnings call in July. However as recently as February, Symson previously also said Stitcher was not for sale.

While downsizing in audio, Scripps continues to expand its television business. It struck a $2.65 billion deal to buy Ion Media last month. Home to crime shows such as “Law and Order” and “NCIS: Los Angeles,” Ion’s network will be combined with Scripps’ five Katz networks and Newsy to expand the reach of Scripps’ TV network business.

Moody's Investors Service said in an update to clients that Scripps will benefit from the sale of the “loss-making podcast business” but said the company would continue to see its margins “compressed” in 2020 by the impact of COVID-19 on television advertising.