StitcherSiriusXM250

In a move that SiriusXM CEO Jim Meyer says will allow the company to offer a “one-stop shop” to create, publish and monetize podcasts, the satellite broadcaster today confirmed the rumored deal to buy Stitcher from the E.W. Scripps Co. The $325 million price tag will marry Stitcher’s podcast portfolio – which encompasses such owned-and-operated podcast networks as the comedy-focused Earwolf and the Midroll advertising rep firm – with SiriusXM’s growing podcast business that 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.

“Together, we can create a transformative one-stop shop to better meet the needs of podcast creators, publishers and advertisers—while also providing listeners with new ways to find and connect with great shows,” said Meyer in a memo to employees. He said SiriusXM’s combined properties will reach more than 150 million listeners and give it one of the largest addressable audiences in the U.S. and make the company a “full-service platform” for podcast creators, publishers, and advertisers. “With our team’s collective expertise in digital audio, analytics and ad tech, plus Stitcher’s deep experience in podcasting, I see significant opportunities ahead,” said Meyer.

Stitcher had an average 22.3 million downloads per week between May 11 and June 7, according to Triton Digital data. It also said Stitcher’s weekly reach averaged 7.2 million.

SiriusXM has largely remained on the podcast sidelines for the past several years. But ever since it acquired Pandora, it has opened up to the opportunities that on-demand audio offer. Just last month SiriusXM struck a deal to buy podcast management and analytics platform Simplecast, with plans to pair its content management, audience analytics and audio tools with the monetization platform of Pandora-owned AdsWizz. Meyer told an investor conference last month that the company would make further acquisitions in the ad tech space. “It’s not very glamourous but it’s really necessary if you want to be able to take podcasts and monetize them through advertising,” he said.

Under the terms of the agreement, SiriusXM will make a cash payment of $265 million to Scripps. The agreement provides that SiriusXM will potentially make up to $30 million inadditional payments in both 2020 and 2021, based on Stitcher achieving certain financial metrics. Scripps CFO Lisa Knutson said the milestones were developed with the current economic climate in mind. “We believe they are highly achievable,” she said. The transaction is expected to close in the third quarter of 2020, subject to receipt of required regulatory approvals.

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. And while Stitcher had been losing money, Scripps told investors that the sale will bring a return of more than double Scripps’ investment in podcasting over the last five years. CEO Adam Symson said the 4.5-tmes multiple paid by SiriusXM reflects the “significant value” that Scripps created since it entered the podcasting business. He noted that under their ownership, the podcast business grew 52% from 2016 to 2019.

Despite public denials that it was looking to sell Stitcher as recently as February, Symson said on a conference call Monday that Scripps began exploring a sale of the business last winter. “We had come to believe that Stitcher and its employees would be best positioned to continue on its growth trajectory as part of a larger audio-focused company,” he said. Symson said they looked at “partnership options” but ultimately decided a sale was best. He also denied that the recent economic downturn was a motivating factor for selling. “It had noting to do with COVID-19,” Symson said.

Stitcher earlier sold off its radio station business in a series of deals worth a combined $83.5 million during 2018. Scripps also owns 60 television stations in 42 markets along with various national TV networks.

Triton Digital Not For Sale

The sale of its podcast business as well as its radio station division has left Scripps with one last audio-related business. It still owns the Los Angeles-based digital audio technology and advertising company Triton Digital. But Symson said Scripps has 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, which we expect to continue to see solid growth both domestically as well as internationally form here on out,” he said. During the call with analysts, Symson explained that Triton has “very controllable expenses” even as it quickly grows around the globe. “As we expand that business across the world, the expenses don’t scale as the revenue scales, so we really like that business in the audio streaming space,” he said.