The war over podcasting appears to be heating up. Today, SiriusXM announced it will acquire Stitcher from the E.W. Scripps Company in a deal that’s potentially worth a whopping $325 million.
The move is clearly aimed at beefing up SiriusXM’s podcast offerings and making it more competitive against rivals like Spotify, iHeart Radio, and even Apple. Buying Stitcher also gets SiriusXM the comedy network Earwolf and Midroll Media, an extensive podcast ad network. All that sounds like corporate mumbo jumbo, but it actually includes some high-profile podcasts that will now be under the SiriusXM umbrella. They include Conan O’Brien Needs a Friend, Freakonomics Radio, Comedy Bang! Bang!, How Did This Get Made?, and WTF with Marc Maron, among others.
As part of the deal, SiriusXM is agreeing to pay $265 million in cash upfront, with the rest dependent on 2020 and 2021 financial results. It’s a tidy profit for Scripps—it bought Midroll in 2015 for $55 million, and the Stitcher app a year later for $4.5 million. According to a Scripps investor call, the deal is worth 4.5 times what Stitcher earned in revenue for 2019. The acquisition is expected to close in Q3 2020.
To be clear, while the big-name podcasts are great, the ad network is probably what has SiriusXM really salivating. Apparently, over two-thirds of Stitcher’s revenue comes from Midroll, according to an investor call about the Stitcher acquisition. It also recently acquired Simplecast, a podcast management and analytics platform, and AdsWizz, an ad-tech and monetization platform. SiriusXM also owns Pandora, which it bought for $3.5 billion back in 2018. How all this fits exactly into a new podcasting empire is unclear, but the bones are there. In any case, it’s a better foundation than the podcast channel that SiriusXM is currently limited to. That said, we’ll probably have to wait a bit to see what kind of podcast-ad tech Voltron SiriusXM assembles out of its recent acquisitions.
Podcasts have been a burgeoning battleground in the streaming wars for some time now. According to the Wall Street Journal, podcasts generated a whopping $678.7 million in ad revenue last year, and that number is expected to exceed $1 billion by 2021. That’s a huge chunk of money up for grabs (and it’s always about the money).
Spotify pivoted to podcasts last year after it acquired Gimlet Media, mixing them into music playlists, and generally reminding you that it has a ton of podcasts with each new feature it rolls out. In May, it also locked down Joe Rogan’s podcast as a Spotify exclusive, making it clear that its podcast strategy isn’t going away anytime soon. Apple hasn’t done anything flashy with podcasts in a hot minute, but it continues to be a big player just because at this point, it’s muscle memory for lots of folks to head over to Apple’s podcast app. That said, Sonos is also emerging as a new player in streaming audio content, launching its free Sonos Radio feature which includes 60,000 stations on top of original content.
Just as media companies pivoted to video en masse, it looks like the pivot to podcasts is well underway. Unfortunately, this also means you probably won’t be able to convince your dudebro friends that they shouldn’t turn their horrible idea into a podcast.