Scripps bought Stitcher for $4.5 million in 2016 and combined it with Midroll Media, which it bought for $55 million the year prior. According to E.W. Scripps, the $325 million price tag represents a return of more than 100% in its investment in podcasting over the last five years.
Stitcher’s 2019 revenue was $72.5 million, according to Scripps, representing a compound annual growth rate of 52% from 2016-19. News of SiriusXM’s talks to buy Stitcher emerged last week, first reported by the Wall Street Journal.
The deal will build on SiriusXM’s $3 billion acquisition last year of Pandora, the music and podcast-streaming company. According to SiriusXM, with the addition of the Stitcher and Midroll networks to its existing assets, the company will reach over 150 million monthly listeners across multiple platforms.
“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,” SiriusXM CEO Jim Meyer said in a statement. All of Stitcher’s employees are to join SiriusXM after the close of the deal, expected to happen in the third quarter of 2020 subject to regulatory approvals and other usual closing conditions.
The Stitcher division includes three business lines: the Midroll advertising rep firm; owned-and-operated podcast networks, including the comedy-focused Earwolf; and the Stitcher podcast listening platform.
Stitcher’s podcasts include “Freakonomics Radio,” “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.”
“This sale is consistent with Scripps’ track record of growing businesses that capitalize on the evolution of consumers’ media habits and then unlocking shareholder value through spinoffs, exits and continued organic growth,” Scripps president/CEO Adam Symson said in announcing the pact. “Over and over, this strategy has proven effective as well as profitable for the company and its shareholders.”
With the deal, SiriusXM is angling to get into the U.S. podcasting big leagues. It also continues the M&A trend in the still-hot sector, following other moves including Spotify’s nearly $600 million buying spree over the past year, which has included acquisitions of Gimlet Media and Bill Simmons’ The Ringer. Other deals in the sector include iHeartMedia’s $55 million acquisition of podcast pioneer Stuff Media (parent of HowStuffWorks) in 2018, and radio broadcaster Entercom’s purchase last year of Cadence13 and Pineapple Street Media.
Stitcher’s mobile app lets users stream podcasts for free with ads or pay for Stitcher’s no-ads $5 monthly Premium subscription tier, which includes exclusive bonus podcast episodes and more than 300 comedy albums.
Under the terms of the sale, SiriusXM is paying $265 million in cash upfront to Scripps. On top of that, the satellite radio and audio-streaming company will pay an earnout of up to $30 million based on 2020 financial results (to be paid in 2021) as well as up to $30 million based on 2021 financial results (to be paid in 2022).