Sirius XM (SIRI) to Acquire Stitcher Podcast Network for $300M

SiriusXM SIRI is nearing a $300 million deal to buy the Stitcher podcasting platform from broadcaster The E.W. Scripps SSP for about $300 million, per a Wall Street Journal report.

Stitcher will provide yet another way for Sirius XM to expand its audience further from 34.8 million total subscribers reported at the end of March. Stitcher’s executive team has years of podcasting experience, which can help boost Sirius XM's know-how in the burgeoning field.

The company currently expects to report positive net new self-pay subscribers for the second quarter ending Jun 30, 2020. Notably, Sirius XM added 69K net self-pay subscribers in the first quarter.

However, Sirius XM believes, the coronavirus pandemic and its related economic impact will hurt subscriber, advertising and equipment revenues as well as the sale of satellite radios, components and accessories.

Sirius XM Holdings Inc. Price and Consensus

 

Sirius XM Holdings Inc. Price and Consensus

Sirius XM Holdings Inc. price-consensus-chart | Sirius XM Holdings Inc. Quote

Stitcher Deal to Strengthen Industry Positioning

The pact is intended to vault SiriusXM into a premier position in the U.S. podcasting business, expanding the satellite radio company’s footprint across all audio-entertainment formats.

Notably, ad revenues from podcasts in the United States rose an estimated 42% to $678.7 million last year, according to the Interactive Advertising Bureau, and are projected to rise to $863.4 million this year and exceed $1 billion by 2021.

Stitcher runs a free podcast listening app and a premium $4.99 monthly service that lets subscribers listen to podcasts without ads. The Stitcher app aggregates over 350,000 shows and over 7 million episodes for podcast listeners.

Stitcher is the parent company of some of the oldest podcast-specific brands in the business. It also owns podcast networks including Earwolf, which is behind such shows as Scott Aukerman's Comedy Bang! Bang! and Office Ladies  and Stitcher Podcasts, with 50 shows including Conan O’Brien Needs a Friend and Freakonomics Radio.

The company is also well-known as a leading ad-sales agency. In addition to the Stitcher app, the company owns advertising arm Midroll Media. In tie-ups with outside networks and shows, Stitcher distributes and sells advertising for more than 250 podcasts — including hit shows like My Favorite Murder, WTF With Mark Maron and Oprah’s SuperSoul Conversations through Midroll Media.

Intensifying Competition in Podcast Space

By acquiring Stitcher, Sirius XM is expected to become a major podcast player. The recent deal follows Sirius XM’s mid-June purchase of podcast hosting and distribution company Simplecast, which works with clients like Netflix.

Last year, this Zacks Rank #2 (Buy) company inked a deal with Disney’s Marvel Entertainment to create exclusive podcasts for its satellite and radio streaming businesses. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The satellite-radio giant is working to expand into the rapidly growing podcasting industry, following similar moves by media and tech companies including Spotify SPOT and iHeartMedia IHRT.

Spotify has spent approximately $700 million on podcast-related acquisitions in the past 18 months, including its buyout of Anchor FM ($154 million), Gimlet Media ($195 million) and Parcast ($55 million) last year alongside Bill Simmons’ sports podcast The Ringer (around $196 million) in the first quarter 2020.

Last month, Spotify spent a $100 million on locking an exclusive deal with the Joe Rogan Experience, which was Apple’s biggest audio podcast on its platforms last year. Spotify is also releasing localized versions of Sandra, Gimlet’s scripted podcast series from 2018, in four non-English speaking markets, Brazil, France, Germany, and Mexico.

Moreover, Spotify recently signed contract with Kim Kardashian West to produce podcast content and also announced that it has partnered with AT&T's Warner Bros. and DC Comics to produce & distribute an exclusive original slate of narrative scripted podcasts about super heroes and super villains such as Batman, the Justice League and Birds of Prey, among other familiar superheroes.

In February, iHeartMedia announced turning some of its popular podcast series into books. In 2018, iHeartRadio acquired Atlanta-based podcast publisher Stuff Media for $55 million.

Stitcher's app, which offers more than 100,000 titles, will serve as an alternative to Spotify or Apple Podcasts for Sirius XM.

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