Scripps sells podcast business Stitcher to SiriusXM for $325 million

E.W. Scripps Company said Monday that it agreed to sell its podcast company, Stitcher, to SiriusXM for $325 million.

Why it matters: The sale price speaks to the extraordinary growth of the podcast industry in just a few short years.

By the numbers: Scripps bought Stitcher four years ago for just $4.5 million. Now, it's selling it for more than four times Stitcher's 2019 revenue of $72.5 million.

• Scripps notes that the sale marks "a return of more than double Scripps’ investment in podcasting over the last five years."
• It says that more than two-thirds of Stitcher's revenue comes from Stitcher's podcast advertising platform, Midroll.

Details: The deal includes $265 million of cash upfront, with an earnout of up to $30 million based on 2020 financial results (paid in 2021) and an earnout of up to $30 million based on 2021 financial results (paid in 2022).

• On a conference call with investors, Scripps CFO and executive vice president Lisa Knutson said that those financial goals were created in conjunction with SiriusXM, with the pandemic in mind, and that she believes that they are achievable.
• The deal includes moving all of Stitcher's employees to SiriusXM.

The state of play: The deal also speaks to SiriusXM's big ambitions to grow as a leader in the podcast space, rivaling Spotify and to an extent Amazon and Apple.

• Two weeks ago, SiriusXM acquired Simplecast, a popular podcast management platform that helps podcasters publish, manage and measure their content. 

• It already owns podcast ad company AdsWizz, which it acquired through its purchase of Pandora in 2018.

The big picture: Podcasts are expected to bring in less than $1 billion in revenue this year, but it's by far the fastest-growing advertising medium. Continued investments in the space by big companies like SiriusXM and Spotify are expected to help the industry mature faster.

• To that end, Knutson noted on the call that when it purchased Midroll in 2015, only 15% of Americans listened to at least one podcast monthly. Now, according to Edison's latest Infinite Dial podcast report, more than two-thirds of Americans listen to at least one podcast monthly.

Go deeper: Spotify's growing podcast ambitions