SiriusXM to buy Stitcher for up to $325 million in largest podcast deal yet

Wendy Lee
·4 min read
LOS ANGELES, CA -- DECEMBER 11, 2018: Guest Kulap Vilaysack, left, joins an episode of "Yo, Is This Racist?" with host Andrew Ti at comedy podcasting network "Earwolf." The company has expanded to include big-name talents including Conan O'Brien. (Myung J. Chun / Los Angeles Times)
Guest Kulap Vilaysack, left, joins an episode of "Yo, Is This Racist?" with host Andrew Ti on Earwolf. The comedy podcast network is part of Stitcher, which will be acquired by SiriusXM later this year. (Myung J. Chun / Los Angeles Times)

SiriusXM confirmed Monday it will acquire podcasting company Stitcher for up to $325 million in the industry's largest podcasting deal yet.

The acquisition will give the satellite radio giant, home of such programs as the "The Howard Stern Show," a greater foothold in podcasting. The company said it would pay $265 million in cash for Stitcher and potentially up to $60 million more if Stitcher meets certain financial metrics this year and in 2021.

The deal will increase SiriusXM's reach to more than 150 million listeners across all its properties. Stitcher creates podcasts and links podcasters to advertisers through its Midroll Media advertising network. Stitcher also operates its own app.

Stitcher podcasts include "Conan O'Brien Needs a Friend" and "Comedy Bang! Bang!" The company is based in New York but also has offices in Los Angeles and San Francisco.

"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," CEO Jim Meyer wrote in a memo to his staff Monday. "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."

The company is bolstering its presence as rivals such as Spotify and iHeartRadio have beefed up their investments in the space. In 2018, iHeartRadio acquired Atlanta-based podcast publisher Stuff Media for $55 million, and last year, Spotify bought several podcast-related companies including New York-based Gimlet Media for around $230 million.

SiriusXM in recent years has made several acquisitions, including its 2018 purchase of streaming service Pandora in an all-stock transaction valued around $3.5 billion. The company also recently acquired podcast management firm Simplecast.

Last year, Walt Disney Co.'s Marvel Entertainment agreed to supply exclusive podcasts for SiriusXM’s satellite radio and streaming services.

“It is a very big deal, for a very big network,” said Tom Webster, senior vice president at Edison Research, about SiriusXM's acquisition of Stitcher. “Spotify has a stated goal that they want to be the number one audio platform in the world. SiriusXM is putting together their answer to that.”

Webster said he expects to see more independent podcast firms get acquired as large businesses look for ways to expand their audiences to get more advertising dollars.

"Ultimately, it’s about offering advertisers a complete portfolio of listeners," he said.

Podcasts are expected to bring in nearly $1 billion this year in advertising revenue, according to the Interactive Advertising Bureau Podcast Ad Revenue Report prepared by PwC. The study's authors reduced their previous estimate for the industry's growth rate by roughly half because of COVID-19's impact on advertising.

Stitcher was acquired by The E.W. Scripps Co. in 2016 for $4.5 million. Prior to buying Stitcher, Scripps bought Midroll in 2015 for $55 million.

Last year, Stitcher had $72.5 million in revenue, up 42% from 2018, because of growth in advertising, E.W. Scripps Co. said in its annual report.

Scripps operates 60 television stations during a challenging period for the industry. Broadcast networks' ad revenue has been hit hard by the COVID-19 pandemic.

Scripps President and CEO Adam Symson said in a statement that Stitcher's sale is part of Scripps' track record of growing successful businesses and then selling them.

“Over and over, this strategy has proven effective as well as profitable for the company and its shareholders," Symson said.

The company said in a call with analysts on Monday that it had explored selling Stitcher prior to the rapid spread of COVID-19 and that the disease had nothing to do with its decision.

The deal is expected to close in the third quarter.

SiriusXM stock rose slightly at 0.5% on Monday to $5.73 a share, while E.W. Scripps stock rose 6% to $9.47 a share on the Nasdaq.