Podcast boom: SiriusXM nears deal to buy ‘Freakonomics Radio’ producer
New York-based SiriusXM is close to buying Stitcher, a major podcasting network, as the fast-growing industry continues to draw bigger players, sources said.
The satellite radio powerhouse is in advanced talks to buy Stitcher from E.W. Scripps Co. for about $300 million, although the amount could change because the deal has not closed, according to two people familiar with the matter who were not authorized to comment.
If the $300-million price tag is reached, it would be considered the largest deal to date in the podcast industry and a sign of how rapidly the internet radio business has taken off in recent years.
SiriusXM is looking to bolster 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 declined to comment. A Stitcher spokeswoman did not return a request for comment.
Dawn Ostroff, Spotify’s chief content officer, says she plans on making hundreds of original podcast series next year as part of a strategy to expand the streaming platform’s podcast offerings. The company aims to have 20% of the listening on its service be non-music.
Before the novel coronavirus outbreak, the podcast industry had seen a surge in growth as more consumers turned to digital radio for entertainment, news and discussions on culture.
With its expected acquisition of Stitcher, SiriusXM will expand its total audience size to more than 150 million listeners, according to one person familiar with the matter.
SiriusXM, known for its subscription satellite radio programs like “The Howard Stern Show,” has been expanding its reach. In 2018, the company purchased streaming music service Pandora in an all-stock transaction valued at around $3.5 billion.
Last year, Walt Disney Co.'s Marvel Entertainment agreed to supply exclusive podcasts for SiriusXM’s satellite radio and streaming services. And the company recently acquired podcast management platform Simplecast.
The Stitcher deal, however, would give SiriusXM a much bigger footprint in podcasting and a greater share of the lucrative advertising dollars it attracts.
“It’s just another indication that bigger is better,” said Norman Pattiz, chairman of PodcastOne, a Beverly Hills podcast company. “It is important for SiriusXM to be able to make a deal like this to stay competitive with Spotify and other music platforms.”
Pattiz’s own company was recently acquired by LiveXLive Media Inc. in an all-stock transaction. Part of the reason for the acquisition was to add video to the company’s offerings, Pattiz said.
L.A.-based live music video streaming service LiveXLive said it plans to acquire PodcastOne, a Beverly Hills-based podcast production company. The all-stock transaction is the latest sign of growth in the podcast industry.
“Now we can all go to advertisers and provide them with bigger audiences and cross platforms,” he added.
Stitcher is based in New York but has offices in Los Angeles and San Francisco, and was acquired by E.W. Scripps Co. in 2016 for $4.5 million. Scripps operates 60 television stations that have been hard hit by the drop-off in advertising revenue due to the pandemic.
Stitcher is considered a bright spot for E.W. Scripps. The network creates original podcasts and is known for such programs as “Freakonomics Radio,” “How Did This Get Made?” and “Conan O’Brien Needs a Friend.” The company has its own app that provides free access to shows, as well as a subscription program for exclusive, ad-free content. Stitcher also operates the Midroll Media advertising network that links podcasters with advertisers.
Last year, Stitcher had $72.5 million in revenue, up 42% from 2018, due to a growth in advertising, E.W. Scripps Co. said in its annual report.
News of the deal was first reported by the Wall Street Journal.
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