SiriusXM Buys Podcaster Stitcher From E.W. Scripps For $325 Million

Stitcher
stitcher

SiriusXM has clinched its deal to buy podcasting business Stitcher from E.W. Scripps.

The satellite radio giant and Pandora parent, which has been bulkign up in podcasting, said the 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.

“The addition of Stitcher is an important next step as we continue to develop and strengthen our offering in the fast-growing podcasting market,” said Jim Meyer, CEO of SiriusXM. “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. Stitcher has a talented team with deep experience in the podcast space, and we look forward to working with them to better meet the needs of creators, advertisers, and listeners.”

Cincinnati-based Scripps, in a separate release, said the purchase price represents a return of more than double its investment in podcasting over the last five years.

Stitcher covers three related podcast businesses: the Midroll advertising rep firm; owned-and-operated podcast networks; and the Stitcher podcast listening platform. Scripps was an early entrant into podcasting, acquiring Midroll in 2015 for $55 million and the Stitcher app in 2016 for $4.5 million. Stitcher has expanded rapidly with $72 million in revenue last year — reflecting a compound annual growth rate of 52% from 2016-19, Scripps said.

Scripps President and CEO Adam Symson said Stitcher would fare well at this point as part of a pure play audio company like SiriusXM. The sale will help Scripps reduce debt. It will remove Stitcher’s annual losses — which it said were “in the high-teens millions of dollars” — from Scripps balance sheet, which the company forecast would improve in its National Media segment profit and company operating income.

“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,” said Symson.

The transaction, which was anticipated, calls for $265 million of cash upfront; earnout of up to $30 million based on 2020 financial results and paid in 2021; and earnout of up to $30 million based on 2021 financial results and paid in 2022, Scripps said.

The full price represents 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

The transaction is expected to close in the third quarter. LionTree Advisors has acted as exclusive advisor to Scripps in the sale process, and BakerHostetler is serving as legal counsel.

This article was printed from https://deadline.com/2020/07/siriusxm-buys-podcaster-stitcher-e-w-scripps-325-million-1202984094/