Is Pandora Stitchering A Sirius Podcasting Strategy?

The podcasting buying spree continues, and this time its SiriusXM (Pandora) with the open-checkbook, gobbling up Stitcher’s three podcasting business arms and causing a lot of puzzled looks from analysts and pundits alike.

July 13, 2020

Article

If you haven't heard about the Sirius XM Pandora Stitcher deal just yet; don't worry. It's probably the only thing you're going to hear about from podcasting news circles this cycle. And then you can go back to your regular life as a working podcaster.

Not that I'm ambivalent or apathetic about the deal. I’m just puzzled. But let’s talk about what we know about this fresh-out-of-the-oven deal first.

Show Us The Podcasting Money

MarketWatch tells us SiriusXM (which means Pandora) is going to spend $265 million in cash to buy E. W. Scripps (which means Stitcher). Pandora will kick in up to $60 million of additional payments if Stitcher can achieve certain financial goals in 2020 and 2021.

The Verge tells us the deal is for all the podcasting bits of the company: Stitcher, the podcast listening app and directory; Stitcher, the podcast network, which has some exclusive content and some windowed shows, which is content that comes out first exclusively on Stitcher and then days and or weeks later everywhere else; and Earwolf, the production arm of the network that makes some rather big and popular podcasts; and Midroll, the podcast advertising service.

Some of the strategy of this move is pretty clear. Some less so.

It’s fairly clear that SiriusXM/Pandora are just following Spotify’s lead. That makes sense, as Pandora and Spotify are both competitors in the audio space. (Of note, Pandora is projected to fall behind Spotify in popularity very soon.) It makes sense that adding more pieces of the podcasting supply chain into Pandora’s business makes a lot of sense. And remember: Pandora just bought podcast hosting company SimpleCast a few weeks ago.

A Puzzling Podcasting Purchase Worth Pondering

On the surface, this seems like a pretty obvious play to maintain parity with their bitter rival Spotify. But to me, it seems a bit disjointed. Perhaps that's because Sirius XM/Pandora aren't talking publically about their plans as much as Spotify did when they were making their big acquisitions starting in 2018. It could be that I’ve just not yet been exposed to their larger strategy.

I’m more puzzled by the finances of this deal. Not that I’m even remotely qualified to properly vet this deal, as I’m no expert in mergers and acquisitions. But in this case, it doesn’t take a financial genius like Navin Johnson’s dad to see some problems. E. W. Scripps’ share price is struggling this year, according to MarketWatch, with a drop of 43% this year.

SiriusXM’s market performance isn’t much better, with a stock value down 20% thus far in 2020. And before you lay the blame on the pandemic or global economic recession, I remind you that much of the market has returned to pre-pandemic trading. And that Spotify is close to doubling its stock price since the start of the year.

The next thing that I’ve yet to figure out is how all of these disparate parts are going to work together. Because Pandora already has their own advertising company and ad tech in AdsWhizz. Will Midroll’s assets roll under that flag? Will AdsWizz be subsumed by Midroll, who all but lost their identity in 2018 under a Stitcher-first branding redux in 2018? Or will they work independently, with AdsWizz staying focused on the “radio” side of the business while allowing Midroll to continue to innovate in the rapidly-expanding podcasting ad tech game?

Earwolf is a great production company making high-quality content, some of which is exclusive to Stitcher. But Pandora also has original podcasts and exclusive deals, much as they announced in partnership with Marvel in 2019. Will Earwolf manage it all?

Beyond the strategy of “let's spend a lot of money to acquire all aspects of podcasting so that we get to parity with Spotify”, I’m not sure I’m tracking with all of these moves. They seem… disjointed and leave more questions than they answer.

What The SiriusXM/Pandora Acquisition Of Stitcher Means To Working Podcasters

This is good news for all of us. Even with the uncertainty of the economy right now, it still shows podcasting is worthy of large investments and acquisitions.

It will be even better news if SiriusXM takes a similar approach taken by iHeartRadio and starts using their remnant advertising inventory to drive listeners to and awareness of podcasts in their app, we win. Because we know that once people get the podcasting bug, they tend to seek out other shows, not just exclusive content.

And you don’t have to do anything to gain that advantage. Other than making sure your shows are listed on Pandora, obviously. Hopefully, this new acquisition will mean the approval process of six weeks or more shrinks to a realistic number. But we’ll see.

No one is pounding on my door trying to throw $265 million dollars at me. However, a few good-natured souls buy me a coffee on a regular basis. You can do the same at BuyMeACoffee.com/EvoTerra if you are so inclined.

Finally, I would really appreciate it if you would share this episode or the entire show with one person today. Make a phone call, send a text, or fire off an email with a link to Podcast Pontification to another working podcaster in your life. Please?

I shall be back tomorrow with yet another Podcast Pontifications.

Cheers!

Transcript

PPS3E5 PPS3E5 Is Pandora Stitchering A Sirius Podcasting Strategy? Transcript

Evo Terra: [00:00:00] The podcasting buying spree continues. And this time it's Sirius XM Pandora with the open checkbook gobbling up stitchers three podcasting business, arms, and causing a lot of puzzled looks from analysts and pundits alike.

[00:00:21] Hello, and welcome to another podcast. Pontifications with me, Evo, Tara. If you haven't heard about the Sirius XM Pandora Stitcher deal just yet. Don't worry. It's probably the only thing you're going to hear about from podcasting news cycles, circles, this cycle, and then you can go back to your regular life as a working podcast or not that I'm ambivalent.

[00:00:45] Not that I'm apathetic. Not that I'm even. Well, I guess the one thing I am is puzzled, but let's talk about the deal first. Here's what we know. This was just announced this morning. Yes. This was just announced this morning. Monday, January 13th, 2020 Sirius XM is going to spend $265 million in cash up front to buy.

[00:01:16] Stitcher and all of its various podcasting parts. Now that's $265 million. They get an extra 60 million of additional payments will be made. If in fact, Stitcher can't achieve certain financial goals in 2020 this year and next year, 2021 that's information given from market watch. Now, according to all of these players.

[00:01:41] So this is what's going to happen here. The verge tells us that that's this deal by Stitcher, the app, which very well might be the only way, you know, uh, the company of Stitcher perhaps is that's what it is also. There's hosting with that as well. Uh, You have Stitcher the network itself, a network where you can, and that exists right now, which has some exclusive content.

[00:02:03] Also lots of windowed shows. That means content that comes out first, exclusively on Stitcher, and then days and or weeks later everywhere else, they also get to buy ear Wolf. That is the production arm of the network that makes all sorts of big shows, you know, like from celebrities and things like that.

[00:02:22] And then also. They get Midroll, which is the podcast advertising arm for Stitcher. Now all of that comes in part of this deal. And the reason that we're scratching our heads and wondering about this deal is several fold. And I'm going to walk through my thoughts with you for the rest manger our time here today.

[00:02:47] So clearly they're jumping in much like Spotify did. And on the surface, they look very similar Spotify, an app on your phone, Pandora, which is owned by Sirius XM Pandora. Also app on phone Pandora started the game of mobile apps on phone way before, way ahead of, uh, of Spotify. But then again, Spotify caught up.

[00:03:09] Alright, so that's Pandora. So you know them as the app. So it makes sense that adding podcasts into Pandora. Would make a lot of sense in this deal from Stitcher helps. Oh. And by the way, don't forget last week, I think it was, or two weeks ago, Sirius XM and Pandora bought a simple cast podcast hosting company.

[00:03:29] So clearly they're making a big play much like our friends at Spotify and that's true, but it seems a bit more disjointed. It doesn't seem to follow a logical progression that we're able to follow. Now, perhaps that's just because Sirius XM and Pandora, aren't talking about things as much as Spotify was talking about things when they were making their big acquisition in 2018 and 2019, it just could be that we're not, we've not yet been exposed to what they're trying to do.

[00:04:06] My bigger puzzlement comes from the, the finances of this deal, not the size of the deal. Look, I'm unqualified to talk about whether that is a great deal or a terrible deal. I'll leave that to other people who merger and acquisitions is their thing. But for me, I just look at this and realize that the parent company of Stitcher EWS scripts, uh, their shares have been dropping again, according to MarketWatch, like big time, huge 43.

[00:04:34] Per cent drop a gin shares. Serious the company, making all the buying Sirius XM, their shares in our stocks have dropped 20%. Now you might say, well, that's just because part of their, the pandemic right there, then the global economic recession that we're into. But we're not, I mean, we're really not. We've, we've seen some, some via some dips in the market places, but a lot of that's been returned, not for these two companies.

[00:05:02] Hmm. Hmm. So that's a little bit of puzzling. Second thing that's puzzling is how is all this going to work together as if some of this doesn't make a lot of sense. I get why you might want to own Midroll the company that sells, uh, podcast advertising, but th this company, they already own ads whiz. They have this.

[00:05:25] They have a technology company that inserts advertisements into podcasts, as well as radio look, Sirius XM is not giving up radio, right? It's in their name. It didn't do it for the exclusive content that you get out of companies like ear Wolf, because, and Stitcher, because Pandora already does exclusive deals.

[00:05:48] They did an inclusivity with Marvel. Which was with Stitcher before that. Hmm. That's interesting. And then of course there's a hosting play, which is whatever at them that not even we're talking about. So I'm, I don't see the great strategy. I mean, this makes a lot of sense. If your strategy is let's throw money at this to acquire all aspects of podcasting so that we are now at parody with our rival energy rival enemies, Spotify.

[00:06:18] Okay. Then that makes sense. Then what they're doing seems to make sense, but it just seems like there's a lot of, I don't know, a lot of extra things hanging on to this. Just not a lot of cohesive strategy. Will they be keeping the names? What about all these networks? When stitch already has a bunch of Goodwill built around it, will that be changed and modified?

[00:06:45] What about the Sirius XM play for Spotify? It's clear because everything lives under Spotify period in the story. I mean, you sure, we got Gimlet in AA and a few others here and there that are making content, but that all rolls up nicely. I don't know that it rolls up nicely here. Now more importantly, I don't think any of this matters to the working podcast or today right now.

[00:07:06] I think it's good news. If it's anything right. It shows that even with the economy being what the economy, and more importantly, the uncertainty of what's around the corner for the economy, it's still shows people are willing to make investments in the podcasting space, which is great for all of us because of Sirius XM takes the road that I heart radio took.

[00:07:28] And that is using their remnant advertising and radio, which radio has a lot of remnant advertising to start driving listeners of their content that they put out over their radio. If they start driving people to use an app, to listen, to podcasts their own podcasts. That's great because just like.

[00:07:50] IHeartRadio did, Hey, listen to this particular radio station on the iHeart radio app that our heart radio app contains other podcasts. Great push into Pandora, where all of the people who are not part of the Pandora family have our shows listed. That's really a good thing for us. If it works. I mean, there's a lot of money on the table and it wouldn't be the first business deal that didn't make a lot of sense to not be very sensical on the long run.

[00:08:18] So, yeah. Hard to say exactly where it's going to go. So no big action for you right now. Other than if you're not listed on Pandora, why not? It only takes four to six weeks not getting to get listed on Pandora. So, you know, you should make sure all of your shows are listed on Pandora as well. And if you are so inclined, please go to buy me a coffee.com/evo Tara, and buy me a coffee for my pontificating out of the blue on this particular deal that just dropped in my lap today.

[00:08:45] And I would really appreciate it. If you would share this episode or just share the name of my show with someone, one person individually, pick up the phone, send one person, a text and email with a link to podcast pontification so that another working podcast or in your life can start thinking about the future of podcasting and ways to make podcasting better.

[00:09:05] That's it? I shall be back tomorrow with yet another. Podcast. Pontifications cheers.

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