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BFD Expert Voices - Media Deals

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SXM Media, the sales group of Sirius XM Holdings, has renewed its U.S. ad-sales deal with SoundCloud through at least 2024, the company exclusively tells Kerry, in a move to grow revenue for both audio platforms.

Why it matters: SiriusXM, which bought a $75 million minority stake in SoundCloud in 2020, will continue splitting the ad revenue between the two companies, according to the agreement. 

The deal aligns with the company's strategy to be a leader in audio ad sales amid stiff competition for listeners and subscription dollars. 

Details: The expanded deal makes SoundCloud's U.S. ad inventory available on AudioGO, a self-serve ad platform launched in 2020 by SiriusXM-owned AdsWizz, for the first time. 

SoundCloud has a separate agreement with AdsWizz for some European markets.

Since the ad sales partnership began in 2019, the number of brands on SoundCloud has increased by more than 20-fold, says Phil Wierzbinski, vice president of revenue partnerships at SXM Media.

SoundCloud's audience is "engaged, diverse and increasingly Gen Z," he says.

The big picture: SiriusXM's traditional business of satellite radio continues to be impacted by the rise of streaming audio. 

The company expanded into the new era with its acquisition of Pandora, but it still faces stiff competition from Spotify, Apple and other audio platforms.

To compete, SiriusXM has positioned itself as a leader in audio ad sales by investing in ad tech and a focused sales organization. SXM Media has sales partnerships with other external companies, including NBCUniversal, Audiochuck and Crooked Media.   

Meanwhile, Spotify has focused on beefing up its own content by buying podcast studios and signing exclusive licensing deals and, at the same time, investing more in its own ad business.

1 big thing: SiriusXM's new deal

Illustration of a microphone on top of a stack of dollars.

Paramount is even more of an acquisition target after its move to merge Showtime with Paramount+, Tim writes. 

Why it's the BFD: Paramount has long been seen as a top M&A target ever since Shari Redstone brought Viacom and CBS back together in 2019. 

Of note: Any deal for Paramount would be tricky, given how closely the business is still tied to the fading legacy cable bundle with CBS and cable networks like MTV and Nickelodeon. 

Details: According to the news announced yesterday, Showtime programming will be integrated within Paramount+, which will rename its premium tier as "Paramount+ with Showtime." The Showtime TV channel will also have that same name

Paramount executives warned that the moves would likely lead to layoffs, which have battered media and tech companies over the past month. 

The big picture: Following a year that saw streaming lose its shine, consolidation will be on the tip of every executive's tongue in 2023. 

This spring, Warner Bros. Discovery will roll out its streaming service that combines HBO Max and Discovery+. 

More entertainment companies are also bundling services as the  market becomes more saturated. 

Catch up quick: Paramount set the stage for this integration when it began bundling Showtime and Paramount+ last year.  

2. The BFD: Flipping the M&A channel

Illustration of a vintage television split with a modern smart television.

Spotify reported its fourth quarter and full-year earnings today, one week after announcing it would lay off 6% of staff, Sara writes.

Why it matters: Heavy investments in technology, marketing and content helped fuel Spotify's top-line revenue and user growth in 2022, but they weighed on the company's profits, frustrating investors.

Details: Its number of ad-supported users increased by 25% year-over-year to 295 million, beating analyst expectations. The company earned $486 million in ad revenue last quarter, an all-time high.

3. Charted: Spotify hits all-time high ad revenue

Sapphire Sport raised $181m in its second fund. New limited partners include Madison Square Garden Sports, Arctos Sports Partners and David Blitzer, Axios Sports' Kendall Baker writes. https://axios.link/3HJjW6d

AMC Theatres sold its stake in Saudi Cinema Co. to the Public Investment Fund's Saudi Entertainment Ventures, which it had partnered with in 2017 to fund the joint venture, for $30m. It will now license its brand and IP to that company. https://axios.link/3WOQnoo

Metaphysic, a London-based AI tech startup, formed a strategic partnership with CAA to develop generative AI tools and services for talent. As part of the deal, Metaphysic's AI de-aging tool, Metaphysic Live, will used on the upcoming Miramax film "Here," which stars Tom Hanks and Robin Wright. https://axios.link/3DsCFk6

NBCUniversal and PointsBet extended their five-year sports betting deal by two years, Sara reports. https://axios.link/3jfyYHA

Fox Entertainment and Hulu renewed their content deal for in-season streaming rights for Fox's prime-time shows. https://axios.link/3YaqXCB

Warner Bros Discovery signed content deals with Roku and Fox Corp's Tubi to license 2,000 hours of movies and TV series for Warner Bros. branded FAST (free, ad-supported streaming TV) channels. https://axios.link/40dFhMu

Pinterest and Condé Nast Entertainment signed a content partnership that includes 160 exclusive videos produced by Vogue and Architectural Digest, per WWD. https://axios.link/3wG4mCc

4. Deal flow

Anonymous Content hired Heather McCauley as COO. She spent 10 years at Netflix, most recently as VP, business and legal affairs. https://axios.link/3Y6GtPV

BMG, Bertelsmann's music division, named Thomas Coesfeld as CEO after Hartwig Masuch steps down on Jan. 1, 2024. He has been CFO since April 2021. https://axios.link/3HIAPhx

5. Movin' on up (or out)

OpenAI bolsters ties to other AI startups with venture investments (The Information)

"San Francisco–based OpenAI has invested in at least 16 companies through a $100 million fund backed by Microsoft and other investors that launched in May 2021," Kate Clark writes. 

Trump sues Bob Woodward for releasing interview recordings (Axios)

"Former President Trump on Monday filed a lawsuit against journalist Bob Woodward for $49 million, alleging that recordings of interviews the pair did were released 'without President Trump's permission,'" Erin Doherty writes.

Inside the collapse of Insider's much-hyped D.C. team (The Daily Beast)

"Almost three years later, nearly all of the original Washington, D.C. bureau team is gone. [Darren] Samuelsohn was fired just days before the 2022 election and a steady stream of staffers have exited over the past year. Insider's plan to reshape its political coverage turned out to be 'one of the more wild rides' in political media, a former staffer declared," Corbin Bolies reports.

6. Channel surfing

🗓️ Situational awareness: Join Tim and Sara Fischer this Thursday at 12:30pm ET for a conversation forecasting media trends in 2023 and analyzing the year's biggest dealmaking stories so far. Register to attend.

@tim_bays: "Shrinking" on Apple TV+. I hear this Harrison Ford guy is pretty good. 

@kerrymflynn: "Hadestown" at Walter Kerr Theatre. Never thought I'd have so much fun going to hell. Love me some Greek mythology. 

✏️ Thanks to Michael Flaherty for editing and Jay Bennett for copy editing this newsletter.

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January 31, 2023

1 big thing: SiriusXM's new deal