SiriusXM has made its acquisition of Stitcher from Scripps official.
SiriusXM will pay $265 million upfront for Stitcher, plus additional payments of up to $30 million each year paid in 2021 and 2022 based upon the financial results of this year and next. All Stitcher employees will join SiriusXM.
SiriusXM, the leading audio entertainment company in the U.S., announced today that it has entered an agreement with The E.W. Scripps Company (NASDAQ: SSP) to acquire Stitcher, a pioneer in podcast production, distribution, and ad sales. The transaction will advance and deepen SiriusXM’s position in podcasting, the fastest-growing sector in the audio entertainment ecosystem.
With the acquisition, SiriusXM’s combined properties will contain the largest addressable audience in the U.S. across all categories of digital audio – music, sports, talk, and podcasts. The transaction will also further extend the substantial reach of SiriusXM in the digital audio ad marketplace. The SiriusXM and Pandora owned-and-operated digital platforms, combined with the company’s exclusive ad sales arrangement with SoundCloud for the U.S., and the Stitcher and Midroll networks that are subject to the agreement, will reach over 150 million listeners. Upon completion of the transaction, SiriusXM 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.
“The addition of Stitcher is an important next step as we continue to develop and strengthen our offering in the fast-growing podcasting market,” said Jim Meyer, Chief Executive Officer of SiriusXM. “With Stitcher, we will expand our digital audio advertising presence and look to generate new ways for creators to find and connect with their audiences. Stitcher has a talented team with deep experience in the podcast space, and we look forward to working with them to better meet the needs of creators, advertisers, and listeners.”
Stitcher creates original podcasts, operates multiple content networks that each target a specific genre and audience, and provides podcast ad agency services for leading shows. Through its Midroll Media advertising network, Stitcher acts as a sales and marketing representative to connect advertisers and podcasts based on the advertiser’s desired target audience. Stitcher also owns and operates a popular mobile app listening platform where consumers can stream the latest podcasts ranging from news, sports, talk, and entertainment shows on-demand and free of charge. Users can pay for Stitcher’s monthly or annual Premium subscription, which gives them access to premium content including exclusive, ad-free, and bonus podcast episodes, along with 300+ comedy albums.
Top Stitcher podcasts include Freakonomics Radio, My Favorite Murder, 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.
Upon closing of the transaction, SiriusXM will be the premier full-service platform for podcast creators, publishers, and advertisers – combining the largest digital audio salesforce with a leading podcast ad network. Coming on the heels of SiriusXM’s recent acquisition of podcast management and analytics platform Simplecast, the addition of Stitcher, alongside industry-leading ad tech and monetization platform AdsWizz, will expand the company’s existing suite of podcast hosting, analytics, insights, and marketplace offerings. Additionally, creators will benefit from the transaction through enhanced production, marketing, and promotion capabilities to drive further listening, engagement, and monetization.
Details of the Transaction
Under the terms of the asset purchase agreement, at the closing, SiriusXM will make a cash payment of $265 million to Scripps. The agreement provides that SiriusXM will potentially make up to $60 million in additional contingent payments based on Stitcher achieving certain financial metrics in 2020 and 2021.
The transaction is expected to close in the third quarter of 2020, subject to receipt of required regulatory approvals and the satisfaction of other customary closing conditions.
Guggenheim Securities, LLC is serving as financial advisor to SiriusXM and Weil, Gotshal & Manges LLP is serving as its legal counsel.
Original Report 7/7: Multiple reports indicate that SiriusXM will acquire Stitcher from EW Scripps for around $300 million.
Stitcher will join SiriusXM’s growing on-demand service portfolio that includes Pandora. ad platofrm AdsWizz, and the June purchase of podcast management platform Simplecast. SiriusXM also invested $75 million in Soundcloud this February.
The three verticals of Stitcher fit well with SiriusXM’s holdings. The Stitcher podcast listening app can be integrated into SiriusXM’s and Pandora or create a third platform for the company. The Stitcher Premium subscription service, which currently charges $4.99 per month, and the Earwolf comedy podcast network, bringing titles such as Comedy Bang Bang, How Did This Get Made, and Conan O’Brien Needs A Friend bring additional content to the company. The Midroll advertising services mesh into AdsWizz, Simplecast, and even into selling programming heard on SiriusXM.
Scripps purchased Earwolf and Midroll in 2015 for approximately $50 million and added the Stitcher app in 2016 for $4.5 million. All of their podcasting operations were combined under the Stitcher brand in 2018.
The Hollywood Reporter notes that Stitcher brought in $17.1 million in operating revenue in 2020 Q1, up 13 percent from the same period in 2019.
