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Scripps Sells Podcasting Unit to SiriusXM for $325M

(Image credit: Scripps)

The E.W. Scripps Co. said it agreed to sell its Stitcher podcast business for $325 million to SiriusXM.

Related: Mission Broadcasting to Buy WPIX from Scripps

Scripps said the sale price reflects a return of more than double what the company has invested in podcasting over the past five years.

The sale includes the Stitcher podcast listening platform, comedy-focused Earwolf and the Midroll advertising rep firm.

“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 Scripps CEO Adam Symson. “Over and over, this strategy has proven effective as well as profitable for the company and its shareholders.

Scripps will get $265 million in cash upfront, with an earn out of up to $30 million based on 2020 financial reports that will be paid in 2021 and an early of up to $30 million based on 2021 financial results to be paid in 2022.

The company added that the sale will help its National Media segment because Stitcher had been losing money annually. The losses were between $15 million and $20 million a year.

The transaction will also help Scripps reduce debt, noted analyst Steven Cahall of Wells Fargo. 

We'd say the balance sheet has been the Achilles heel for EW Scripps after its station acquisitions last year,” Cahall said in a research note Monday. 

“While it was early and savvy in buying Stitcher and Midroll for about $60mm (excluding additional investments over the last few years) it was never likely to be a scaled player in Audio. As such, the divestiture reduces net debt by about 17% or 1x turn on our estimates. We estimate approximately 12% accretion off of the current price of just below $9/sh with Scripps CY20/21 EV/EBITDA multiple going from 11x to 10.5x on the sale but the equity value increasing to more than $800mm on lower net debt,” Cahall said.

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