What was previously a Rumor Fact(ory) item is today finalized and confirmed: SiriusXM is buying Stitcher from Scripps. We received press releases from both SiriusXM (via the PR office of subsidiary Pandora) and E.W.Scripps.
The acquisition price is $325-million, which Scripps says is more than doubling the return on its investment over five years. Scripps bought Midroll Media (podcast advertising) in 2015 for $55-million, then the Stitcher listening app in 2016 for $4.5-million. Stitcher became the leading public-facing brand of the group which also includes podcast content brand Earwolf. Scripps invested more during its years of ownership.
Here are Scripps’s deal highlights:
- Sale price of $325 million, with $265 million of cash upfront; earnout of up to $30 million based on 2020 financial results and paid in 2021; earnout of up to $30 million based on 2021 financial results and paid in 2022
- Full price representing an internal rate of return after taxes in the mid-20% range and cash-on-cash return of more than 2x, which incorporates the purchase prices for Midroll and Stitcher of $59.5 million as well as Scripps’ investments in the business over the last five years
- Improvement in National Media segment profit and company EBITDA with the elimination of Stitcher annual losses in the high-teens millions of dollars
- Estimated tax liability of approximately $70 million assuming the full earnout is achieved. Scripps has approximately $190 million of net operating loss carryforwards that would offset about $40 million in 2020 tax liabilities.
- The move of all Stitcher employees to SiriusXM.
On the buyer’s side, the news naturally emphasizes the acquired advantages for Sirius:
- Transaction will Combine the Leading Audio Entertainment Company in the U.S. with a Pioneer in Podcast Production, Distribution, and Ad Sales.
- Acquisition will Create the Premier Full-Service Platform for Podcast Creators, Publishers, and Advertisers.
- Stitcher Podcasts Include Freakonomics Radio, My Favorite Murder, 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.
Sirius now claims “the largest addressable audience in the U.S. across all categories of digital audio – music, sports, talk, and podcasts.” Sirius numbers that addressable audience as 150-million. The word “digital” is important in there, or iHeartRadio would be writing up a counterpoint PR.
More particularly, even as the ink dries, SiriusXM is positioning itself as the primary force in podcasting: “Upon closing of the transaction, SiriusXM will be the premier full-service platform for podcast creators, publishers, and advertisers – combining the largest digital audio salesforce with a leading podcast ad network.” It’s not just Stitcher which bolsters this claim, but past acquisitions of Pandora (streaming giant), AdsWizz (multi-faceted ad tech), and Simplecast (podcast hosting).
The deal is projected to close in Q3. The Scripps earnings call for that quarter should be a fun listen.