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July 7, 2020, 9:25 a.m.

SiriusXM makes a move for podcasts, buying Stitcher for around $300 million

Plus: Spotify makes a play for Latinx podcast listeners, and turmoil at WNYC continues.

Editor’s note: Hot Pod is a weekly newsletter on the podcasting industry written by Nick Quah; we happily share it with Nieman Lab readers each Tuesday.

Welcome to Hot Pod, a newsletter about podcasts. This is issue 265, dated 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 Monday 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 makes 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 toward acquiring several TV stations in early 2019, this swift context change all but took it 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 in 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 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 did. 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. A decent return.

In Stitcher, SiriusXM is getting a strong starter kit, which it probably needs if it really wants 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 it has yet to hammer down a coherent position in podcasting. Which isn’t to say it hasn’t tried anything: there was 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 it a coherent strategy, of course. But it does give SiriusXM a solid vessel through which it 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 standalone domain, or as a complementary layer to what it already has. 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 awhile 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” 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. I’ll be watching (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 it 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.

This week in Spotify. Two stories that are part of the same thread:

First, today, Spotify is releasing localized versions of Sandra, Gimlet’s scripted podcast series from 2018, in four non-English speaking markets: Brazil, France, Germany, and Mexico. According to the corporate blog post, the effort involved script alterations, casting choices, and local production teams that are collectively meant to make the production more culturally specific to the corresponding market.

Second, the company has created a team to “develop original audio programming for the growing U.S. Latino podcast audience,” according to The Hollywood Reporter. The team will be led by Piñol, who previously served as the head of Spotify studios in Latin America. I should note: this news comes shortly after the release of Edison Research’s first Latino Podcast Listener report, which found that “36% of U.S. Latinos have listened to a podcast in English and 24% of U.S. Latinos have listened to a podcast in Spanish.”

So here’s the big takeaway, in my mind: as we’ve previously discussed, a major pillar of Spotify’s podcast strategy seems to be its pursuit of international markets, and the most noteworthy thing we’re seeing from these two stories is the development of tangible infrastructure to meet those ends. Keep a close eye on this front.

Turmoil at WNYC, continued. Last week, The New York Times reported that staffers are expressing considerable disappointment after station leadership hired a new editor-in-chief who was almost the complete opposite of what they had indicated was needed in the role during listening sessions that were held in the wake of station’s 2017 fallout over its toxic institutional culture. (For full context on that, go here.)

From the report:

Reporters and producers sought a person of color, someone who deeply understood New York and who had experience in public radio. So it was with great consternation that the staff greeted the news, delivered on June 11, when the rest of the world would hear it as well — and 45 minutes or so before they met their new boss on Zoom — that the editor in chief of WNYC was going to be a white woman who lived in California, grew up in Kansas and was not from the world of audio.

I have to say: it’s an exceptionally brutal stab in the back to hold listening sessions — principally in the interest of rebuilding much-needed trust between leadership and staffers following a calamitous reckoning — only to make a high-level decision that runs almost completely against much of the feedback that was delivered in those sessions. The hire, at the very least, rendered those trust rebuilding efforts as nothing more than empty performative gestures, further contributing toward the utterly tiresome sense that you simply can’t trust the station’s leadership to do the right thing on its own.

To be sure, there is every bit of evidence that the new editor-in-chief, former San Francisco Chronicle editor-in-chief Audrey Cooper, is an exceptional newsroom leader, as WNYC CEO Goli Sheikholeslami told the Times in her defense of the hire, but, man, that isn’t necessarily the same as a newsroom leader who’s emblematically right for the moment.

WNYC’s leadership was already well on the back foot when it comes to trust with its staffers, and any marginal goodwill that it could possibly have had with some “turning of the page” narrative is now effectively squandered. By doing this in this way, it has placed their staffers, particularly those who aren’t white, in an extremely difficult position — same goes for Cooper as well, I imagine! — when management could’ve facilitated a much-needed breakthrough. What a shame.

Show notes. Reveal is launching its first serialized podcast, American Rehab, which comes out of a three-year investigation. Also, I updated my Best Pods of the Year (So Far) list for Vulture, now that we’re at the halfway mark. Meanwhile, in my inbox, a reader asks why there hasn’t been a daily news podcast in Spanish yet. Good question! If you have insight, let me know.

Photo of money by 401(K) 2012 used under a Creative Commons license.

POSTED     July 7, 2020, 9:25 a.m.
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