Issue 265,  published July 7, 2020

Stitcher is being sold to SiriusXM

And there you have it: Stitcher will have a new parent company.

The Wall Street Journal’s Anna Steele had the scoop last night, reporting that SiriusXM will buy Stitcher from EW Scripps in a deal that’s valued at around $300 million, citing people familiar with the matter. That value would make this the biggest podcast acquisition to date.

Rumors that Scripps was looking to sell Stitcher off have been around for a few months, but it was officially confirmed several weeks ago by a report in The Information, which explicitly named SiriusXM and Spotify as possible suitors. I’m told that the sale comes out of a competitive process, with a list of interested buyers extending well beyond those two companies, and that the shop-around process had been going on since well before the pandemic.

I’d argue that the move makes considerable sense for Scripps. While Stitcher has grown reliably over the past few years — according to Scripps’ most recent annual report, the podcast unit brought in around $72.5 million in revenue last year, more than double what it made in 2017 — the market context around podcasting radically shifted in early 2019, when Spotify dove headfirst into the podcast industry and signaled its intent to heavily invest in the sector moving forward. The Swedish streaming platform would spend more than half a billion dollars on podcast deals over the next year and a half, dramatically increasing the spending levels expected from companies looking to compete in podcasting at scale. For the television-centric Scripps, which had already committed over half a billion dollars towards acquiring several TV stations in early 2019, this swift context change all but took them out of the running to competitively spend on podcasting in the short-to-medium term.

Furthermore, I’d say that Stitcher was in a uniquely tough position over the last year and a half, finding itself at something of an existential crossroads. One of the oldest podcast-specific companies in the business, Stitcher in its present iteration is an entity that does a bit of everything: it sells podcast advertising, it produces content, it houses the historically-important Earwolf network, it owns some IP, it possesses key creative partnerships (most notably, with My Favorite Murder), it manages talent contracts, it operates a listening app with a premium subscription component, it sells merch, and so on.

Put simply, Stitcher is stretched across numerous fronts, and the problem there is that, in this new context, it’s either going to have to scale up to match against companies like Spotify and iHeartMedia or commit to a smaller position in the market, which could mean selectively choosing its battles — thus giving up on a few business lines in favor of more focused niches — or simply stay floating about in the middle, which, as the realities of digital media would have it, is an increasingly untenable position. So, if you were Scripps, I imagine you’re now stuck between a rock and a hard place: either you wage an expensive war in a sector you don’t really specialize in, or you accept a relatively smaller vision of an acquisition you made a few years ago.

OR you could just get the hell out of Dodge and maybe make a decent return by selling Stitcher off to someone who does want to compete in podcasting at scale, which is exactly what they’ve done. Remember: Scripps bought Midroll Media for over $50 million in 2015 and Stitcher for $4.5 million in 2016, later combining the two entities. Now, it’s getting back around $300 million, which, you know, is a decent return.

In Stitcher, SiriusXM is getting a strong starter kit, which it probably behooves them to have if they really want to take a crack at this podcast thing. The satellite radio company is one of the bigger audio players in general, and it has the further distinction of owning the audio streaming platform Pandora, but they have yet to really hammer down a coherent position in podcasting. Which isn’t to say they haven’t tried anything: there’s the confusing early “exclusive streaming deal” with This American Life (now defunct); some not particularly effective technical gambits through Pandora; the Questlove podcast (that later moved to iHeartMedia); and most recently, there was the acquisition of Simplecast, the podcast hosting platform. However, these moves — and some others — generally feel piecemeal, ultimately lacking in some sort of unifying theory or framework.

Not that acquiring Stitcher instantly gives them a coherent strategy, of course. But it does give them a solid vessel through which they can run a more focused podcast effort. There is also the brute alternative, in which SiriusXM would simply break up Stitcher and absorb its various podcast competencies into different aspects of its existing business. That, in turn, will depend on how SiriusXM ultimately views podcasting: as a stand-alone domain, or as a complementary layer to what they already have. Given the parallel incoherence of its consumer-facing brand proposition — basically, it has too many of them between SiriusXM, Pandora, and now, Stitcher — I suspect that it might be a while before we find out the answer to that nut. Indeed, my overarching hunch is that this acquisition was a “deal now, figure it out later” kind of move.

Anyway, aside from the obvious “how does this affect the broader Spotify vs. Apple vs. everyone else battle royale” angle, the main thing I’ll be watching is how SiriusXM’s ownership will ultimately change Stitcher’s culture. Part of this is simple nostalgia on my part, as Stitcher was a prominent fixture of the 2014-2019 podcast era, but much of this has to do with the oddity that Stitcher has been over the past few years. Despite being a relatively old-school corporation, Scripps appeared to have largely left Stitcher to its own devices, and Stitcher went on to carry out the next few years with its core podcasting spirit left relatively intact. It was still quirky in many ways, and that was much appreciated.

I’m somewhat doubtful that will remain the case under SiriusXM’s governance, though. And so two canaries in the coal mine I’ll be watching for will be: (a) what happens to the creators who have contracts with Stitcher once those contracts expire, and (b) whether the current executive team will stick around.

Miscellaneous Notes

(1) It’s my understanding that Triton Digital, which Scripps acquired in late 2018, is not part of this deal with SiriusXM. However, I’m told that they will continue their relationship with Stitcher beyond the closing of this deal.

(2) For quick insight into how SiriusXM leadership has historically thought about podcasting, I’d recommend checking out the transcript of the company’s second quarter earnings call in 2019. I wrote it up in an Insider around that time, but in a nutshell, I’d expect a lot of targeted big-name talent deals moving forward.

(3) Thinking back to that report by The Information, I have to confess that I was surprised Spotify popped up as a suitor. In my mind, there would have been a ton of redundant value, and the only significant step forward that Stitcher offered the Swedish audio streaming platform would’ve been the ad sales team.

(4) One variable that may or may not be germane to today’s development: SiriusXM is still in talks with Howard Stern on a contract renewal.

(5) One interesting thing to think about: in the wake of the recent deal between Spotify and Warner Bros that involves the DC characters, keep in mind that SiriusXM/Pandora has a multi-year deal with Marvel that involves the creation of several kinds of podcasts. Marvel, of course, previously dipped its toes in podcasting through a few projects with Stitcher, so there’s some interesting overlap here.

 

I run this thing.