Business
Scripps agrees to sell podcasting business to SiriusXM for $325 million
CINCINNATI, July 13, 2020 /PRNewswire/ -- The E.W. Scripps Company (NASDAQ: SSP) has entered into an agreement with SiriusXM to sell podcast industry leader
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[{"type":"text","content":"CINCINNATI, July 13, 2020 /PRNewswire/ -- The E.W. Scripps Company (NASDAQ: SSP) has entered into an agreement with SiriusXM to sell podcast industry leader Stitcher for $325 million, a return of more than double Scripps' investment in podcasting over the last five years.\n\n \n \n \n \n \n \n\n \nThe Stitcher company includes three distinct podcast business lines: the Midroll advertising rep firm; owned-and-operated podcast networks including the comedy-focused Earwolf; and the Stitcher podcast listening platform. \nScripps was an early entrant into podcasting, acquiring Midroll in 2015 for $55 million and the Stitcher app in 2016 for $4.5 million. Since then, Stitcher has been a leader in the fast-growing podcast industry, growing revenue at a CAGR of 52% from 2016-19. Stitcher's 2019 revenue was $72.5 million. \nThe opportunity for Stitcher and its employees to join a large pure-play audio company ensures it will expand upon its success, Scripps President and CEO Adam Symson said. \n\"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 Symson. \"Over and over, this strategy has proven effective as well as profitable for the company and its shareholders.\n\"Today's announcement, and the metrics around this sale, are an affirmation of our investment-for-growth strategy. We are firmly committed to our national businesses and are enthusiastic about the opportunities we see ahead in digital audio, over the top and over the air television.\"\nTransaction highlights:\nSale price of $325 million, with $265 million of cash upfront; earnout of up to $30 million based on 2020 financial results and paid in 2021; earnout of up to $30 million based on 2021 financial results and paid in 2022 Full price representing an internal rate of return after taxes in the mid-20% range and cash-on-cash return of more than 2x, which incorporates the purchase prices for Midroll and Stitcher of $59.5 million as well as Scripps' investments in the business over the last five years Improvement in National Media segment profit and company EBITDA with the elimination of Stitcher annual losses in the high-teens millions of dollars Estimated tax liability of approximately $70 million a...