That’s what’s suggested by the WSJ, which on Monday reported that SiriusXM is near a deal to purchase podcast business Stitcher from its parent E.W. Scripps for about $300 million. The Information had reported Stitcher was seeking a buyer a few weeks ago, with Spotify being named as a potential suitor.
Should the deal go through, Sirius would get decent firepower to boost its podcast operation, which consists of Pandora’s ongoing podcast push but also the podcasts that still air on SiriusXM.
Stitcher is the Scripps-owned entity that houses Midroll, a big podcast ad network (it reps over 300 shows downloaded over 150 million times), and Earwolf, a popular comedy podcast network with a roster of shows including “Conan O’Brien Needs a Friend.” In June 2020, 18 out of the top 100 podcasts were Stitcher originals, according to investment bank B. Riley FBR.
And Stitcher also runs its eponymous podcast app, which offers free ad-supported shows and a $4.99/month paid tier with exclusive content.
While this Stitcher portfolio presents opportunities for Sirius to extend the reach of podcast ad campaigns and exclusive podcasts (like those coming from the Marvel deal), keep in mind the deal won’t immediately turn Sirius into some sort of podcasting giant, at least by measure of podcast listeners.
Stitcher is no newbie in the podcast space, but it’s probably not the app that most casual podcast listeners flock to when they first start listening to podcasts. Apple Podcasts and Spotify accounted for over 70% of podcast listening as of Sep. 2019, while this figure was 2.3% for Stitcher, according to Libsyn.
Sure, that was almost a year ago, though Stitcher likely hasn’t shedded challenger status since then: Stitcher currently controls a “low-single-digit” percentage of U.S. Podcast listening with roughly 8M registered users, B. Riley FBR reported in a July note.
Additionally, while Stitcher controls a big podcast advertising operation with Midroll, its revenue streams are relatively small when compared to those of Sirius’. Stitcher generated $17.1 million revenue in Q1 ‘20, while Pandora generated nearly $369 million.
And Sirius can’t bank on Stitcher’s subscription business generating a substantial amount of revenue as podcasts become more popular either: 80% of U.S. Adult podcast listeners that never paid for a podcast before in June said they were “unlikely” or “very unlikely” to pay or donate to listen to a podcast over the next year, according to exclusive data from YouGov provided to VIP.
It’s not like the purchase was a misstep for SiriusXM, which has long been trying to become more prominent in the podcast space with Pandora. There is potential cohesion between its podcast operation and Stitcher’s; it’s just a matter of figuring out where is best to merge operations without confusing consumers and advertisers of all the various moving parts now Sirius-owned.
SiriusXM was available to scoop up Stitcher at the right time from Scripps, which was looking to be in a better position to service its debt load increased by its TV station purchases in 2019. As HotPod author Nick Quah recently suggested, the Stitcher acquisition for Sirius might be viewed as a “deal now, figure it out later” kind of move.
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