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SiriusXM buys Stitcher for $325 million, steps up its march into podcasts

SiriusXM buys Stitcher for $325 million, steps up its march into podcasts

Less than a month after selecting up Simplecast for its podcast distribution and analytics instruments, SiriusXM right this moment is asserting an excellent larger acquisition to lift its recreation within the realm of streamed spoken-word content material. The satellite tv for pc radio firm mentioned it has reached a deal to amass Stitcher from E.W. Scripps for $325 million, a return of  greater than double Scripps’ funding in podcasting, the businesses reported this morning. Stitcher is a podcast pioneer that gives a well-liked one-stop platform to create, monetize (by way of promoting) and distribute podcasts to take heed to by way of its app and on a number of platforms.

Rumors of the acquisition began to floor on the finish of June, and earlier this month the Wall Street Journal reported that it was value $300 million.

Stitcher brings to SiriusXM its personal cell listening app, acquired for $4.5 million in 2016. It additionally operates the Midroll Media community for podcast promoting, acquired for $55 million in 2015. And it creates authentic podcasts and runs a number of content material networks, by way of Earworlf. The deal means hundreds of podcasts will transfer to the SiriusXM secure, together with widespread titles like Freakonomics Radio, How Did This Get Made?, SuperSoul Sunday from The Oprah Winfrey Network, Office Ladies, Conan O’Brien Needs a Friend, Literally! with Rob Lowe, LeVar Burton Reads, Comedy Bang! Bang!, and WTF with Marc Maron.

Combining Stitcher with SiriusXM’s satellite tv for pc radio viewers and Pandora (which SiriusXM acquired in 2018), the corporate says it would now have “the biggest addressable viewers” within the United States for digital audio, together with music, sports activities, speak and podcasts, overlaying 150 million listeners.

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“This sale is in step with Scripps’ monitor file of rising companies that capitalize on the evolution of customers’ media habits after which unlocking shareholder worth by way of spinoffs, exits and continued natural progress,” mentioned Scripps President and CEO Adam Symson, in an announcement. “Over and over, this technique has confirmed efficient in addition to worthwhile for the corporate and its shareholders,” he added.

The sale worth of $325 million consists of $265 million of money upfront with an earnout of as much as $30 million primarily based on 2020 monetary outcomes and paid in 2021, famous Scripps. It additionally consists of an earnout of as much as $30 million primarily based on 2021 monetary outcomes and paid in 2022. All Stitcher workers will be a part of SiriusXM as part of the deal.

“The addition of Stitcher is a vital subsequent step as we proceed to develop and strengthen our providing within the fast-growing podcasting market,” mentioned Jim Meyer, Chief Executive Officer of SiriusXM, in an announcement. “With Stitcher, we are going to develop our digital audio promoting presence and look to generate new methods for creators to search out and join with their audiences. Stitcher has a gifted crew with deep expertise within the podcast house, and we stay up for working with them to raised meet the wants of creators, advertisers, and listeners,” he mentioned.

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The deal follows SiriusXM’s current acquisition of podcast administration and analytics platform Simplecast. Along with its advert tech and monetization platform AdsWizz, the addition of Stitcher will develop the corporate’s current suite of podcast internet hosting, analytics, insights, and market choices.

The deal underscores some key developments within the space of podcasting.

The first is that firms which can be working streaming companies primarily based round music are doubling down on the rising reputation of podcasting content material to enhance these companies, each to develop their audiences, and their viewers engagement.

Sirius — which, along with its subscription-based satellite tv for pc radio service and Pandora, can be a shareholder of SoundCloud — joins its friends in that technique: each Spotify and iHeartMedia have made notable acquisitions to amass authentic podcasting content material, in addition to instruments for podcasters to assist run their companies.

That technique, in flip, has led to a different shift: a beforehand open podcast ecosystem, the place you’ll be able to take heed to any podcast on the app of your selection, has developed right into a world the place platforms intention to have unique content material. (A consequence, you may argue, of getting firms that generate revenues from walled gardens, which primarily comprise the identical troves of music, getting concerned within the enterprise of podcasts.)

Thirdly, it’s not simple to construct podcasting, even with all its reputation and future potential, into a giant and worthwhile enterprise.

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SiriusXM is at least Stitcher’s third proprietor, not counting the interval it was an impartial firm. It was based in 2008, then Deezer acquired it in 2014 for an unknown sum, after which Scripps acquired it lower than two years later for about $4.5 million.

Under Scripps, Stitcher might have been one of many firm’s fastest-growing companies, but it surely was additionally unprofitable. And so, as Scripps faces investor stress of its personal — its losses widened within the final quarter, and that was with COVID-19 coming in solely on the tail finish of the interval, that means the affect might be considerably extra extreme in its Q2 reported later this summer season — parting with its invaluable podcasting asset at a time when it’s in scorching M&A requirement might have appeared like the precise selection.

Deloitte estimated (in December 2019, pre-COVID) that podcasting will break $1.1 billion in revenues this 12 months, however frankly we’re nonetheless within the early rounds of the podcasting business. And right this moment, it was SiriusXM’s flip to throw its hat into the ring.

The transaction is anticipated to shut within the third quarter, pending Hart-Scott-Rodino clearance. LionTree Advisors acted as unique advisor to Scripps within the sale course of, and BakerHostetler is serving as authorized counsel.

Additional reporting: Sarah Perez

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