Nine-figure podcast deals are back. Will it go any better this time?

You might recall Spotify’s podcasting over $1 billion spending spree in 2019 and 2020, including paying $400 million for Parcast, Gimlet Media, and Anchor, at least $200 million for exclusive rights to “The Joe Rogan Experience,” close to $200 million for Bill Simmons’ “The Ringer,” $60 million for Alex Cooper’s “Call Her Daddy,” and $20 million for Prince Harry and Megan Markle.

You might also remember that Spotify reversed course soon after, laying off 200 people from its podcast unit (2% of the total company) as its podcast bet continued to weigh on the company’s bottom line in 2023. However, it appears that a new competitor has taken Spotify’s place as the provider of nine-figure podcasting contracts: SiriusXM. From Bloomberg:

Sirius XM Holdings Inc. signed a multiyear deal for Alex Cooper’s Call Her Daddy podcast and network of shows that will give the satellite radio company the exclusive right to sell ads on the audio and video versions of her show, as well as bonus content and events.

The agreement is worth $100 million for more than three years, according to a person familiar with the arrangement.

An interesting wrinkle in this deal, per Variety, is that this deal isn’t exclusive to a Sirius-owned platform, and Call Her Daddy will still be published on other platforms such as Spotify. This isn’t Sirius’s first time structuring a deal like this. In January, the satellite radio giant paid $100 million for the exclusive rights to “SmartLess,” a podcast hosted by Jason Bateman, Sean Hayes, and Will Arnett, and three weeks, ago, a press release from SiriusXM gave us a preview of what the company is looking to do with its podcasts (emphasis ours):

SiriusXM today announced SiriusXM Podcasts+, a new subscription available directly in Apple Podcasts that will deliver a seamless, premium listening experience for some of the biggest shows on the SiriusXM Podcast Network. Beginning August 5, SiriusXM Podcasts+ will provide subscribers to the new service in the U.S., Canada, and over 50 other countries with ad-free listening to new episodes, exclusive bonus content, and early access to new episodes of popular shows. Many of these benefits will also be available to existing SiriusXM subscribers directly through the SiriusXM app.

While Spotify’s initial plan with its exclusive deals was to steal market share from other podcasting platforms, it looks like SiriusXM’s game plan for monetizing these deals is to 1) leverage the advertising rights of popular shows across multiple podcasting platforms and 2) entice listeners to pay for a subscription by offering additional content and early access to their favorite shows. The first point, in particular, makes far more sense than locking a popular show on one platform. According to a report published by Cumulus Media and Signal Hill Insights, YouTube was the podcast market leader with 24.2% of listens/watches in April 2022, followed by Spotify with 23.8%, and Apple with 16%. Opening your platform potentially quadruples your total addressable audience, and Spotify came to this realization as well, expanding the terms of its newest deal with Joe Rogan allowing him to publish on multiple platforms.

Instead of copying Spotify’s 2020 failed attempt to keep its podcasts on platform, it appears that Sirius is acquiring the advertising and distribution rights of several popular podcasts, without platform restrictions, to achieve better economies of scale with its advertising business. I have my doubts about the SiriusXM Podcasts+ conversion rate (will exclusive content from Joel Osteen really convince more “SmartLess” listeners to pay $5.99 a month? I just don’t see the synergies there.), but I do think this is a much-preferred setup for the advertising business.

For what it’s worth, Warren Buffett appears to be bullish on the business. Last quarter, Berkshire Hathaway purchased 94 million shares of the company, making SiriusXM his biggest increase of the period.