News broke today that SiriusXM will acquire the podcasting platform Stitcher for $300 million. This deal is yet another sign that podcasting is the future of audio.
According to news reports, Sirius is deep in talks with Stitcher’s owner E.W. Scripps to acquire the subsidiary, which includes the Stitcher podcast app as well as Midroll Media, an advertising platform, and Earwolf, a podcast network with a roster of properties that includes the popular Office Ladies.
This deal, if completed, will follow fast on the heels of SiriusXM’s June acquisition of the Simplecast podcast hosting and distribution platform. Sirius entered the podcast game in 2018 via its acquisition of music streaming service Pandora (for $3 billion). Pandora, with 61 million monthly listeners, also distributes podcasts.
Everybody’s Doing It
The ostensible rationale for the deal is Sirius needs to continue to build its podcasting offer to stand a chance against audio competitors like Spotify. The latter leads the podcasting race following its monster $100 million deal with the popular comedian, podcaster, and MMA announcer Joe Rogan.
Another major Sirius rival, iHeart Media, is also a leading player in podcasting. In recent years iHeart has amassed an impressive lineup of podcasts. This includes podcast versions of its popular radio programming. iHeart expanded its podcast library with its 2018 Stuff Media acquisition.
As we reported back in May, even Amazon is showing an interest in podcasting, specifically at the local level.
Podcasts had been on a steady upward growth trajectory. However, the pandemic actually put podcasting growth on pause, from an audience and revenue standpoint. One reason may be the portability of podcasts (great for the car or gym) made them less appealing vs other media formats during shelter at home orders. Over time, and as mobility gradually resumes, we expect the medium’s popularity to continue its trajectory.
According to Digital Music News, “The growing importance of podcast ad revenue is the main driver for podcasting companies being snapped up. U.S. ad revenue from podcasts rose 42% last year to $678.7 million. Revenue from podcasting ads is projected to cross $1 billion by 2021 and will continue to grow.”
So Why Buy Stitcher?
In a podcast distribution world increasingly dominated by Apple and Spotify, the Stitcher app was decidedly an also-ran. The Sticher company was founded in 2008. Scripps acquired it in 2016. Deezer was an in-between owner, offloading Stitcher to Scripps after less than two years.
According to the Hollywood Reporter, the Stitcher division of Scripps generated $17.1 million in Q1 revenues. The app offers more than 100,000 titles. The last figures available estimated Sticher has 8.5 million users. If both the audience and the $300 million purchase figures are correct, Sirius will be paying about $35 a user. Of course, that figure fails to take into account the value of the ad platform or content library.
By contrast, Apple Podcasts carries more than 500,000 titles. There are currently more than one million active podcast titles, according to PodcastInsights.
Given how generally unimpressive Stitcher is as an app, perhaps the deal has more to do with beefing up the Sirius content library. Earwolf has a respectable roster of comedy-related podcasts, including Comedy Bang Bang and the aforementioned Office Ladies. Still, noting that seems ready to go toe-to-toe with the Rogan juggernaut.
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