The end of Howard? How will SiriusXM survive after Stern?

A few years ago, audio platforms and media companies threw a lot of money at creators to build their podcasting slates. Spotify, which spent more than $1 billion on its push, bankrolled its biggest star Joe Rogan, as well as signed deals with the Obamas, the Sussexes and more. Now, after a content spending pullback, it's a different landscape. Which, according to SiriusXM president and chief content officer Scott Greenstein, has matured to the point where it's clear which of the big players in the audio space can still write the check. Namely, SiriusXM, Spotify, Amazon's Wondery and iHeartMedia.

SiriusXM has been particularly aggressive in making rich talent deals this year, snapping up both Smartless And Call her fatherTwo of the most popular podcasts in the industry. The acquisitions are worth not just because of their price tags, both for $100 million-plus, but also for what they say about the satellite radio giant's broader business strategy and reputation as a talent-friendly destination.

“No one is correcting us or saying, 'Oh, I don't know, you should do it this way,' ” says Ted Danson, who is new to the podcasting space. Where Everyone Knows Your Name (Sometimes) with Ted Danson and Woody Harrelsonwhich was acquired by SiriusXM in 2022, under Conan O'Brien's Team Coco banner. “We get this kind of carte blanche: 'Go have fun and talk to interesting people.' “

The company wants to bring in new names and advertising dollars, especially in light of rumors of the retirement of Howard Stern, a blockbuster host who has added fuel to those rumors by reminding listeners every time he's in contract talks of how he built. SiriusXM brand up. But it's also testing ways to convert free podcast listeners to its paid offerings, including paywall possibilities That time has not come—yet—for that Smartless or Call her father.

“When you look at what's happening with the big podcasts, we're constantly experimenting with certain exclusives, putting certain things behind paywalls. Ultimately, we're going to take a gamble, if we find the right podcast talent and a willingness on the part of the talent, we'll lose some free listeners to go behind the paywall, as you always do,” Greenstein said.

“With people who will pay, if that's enough, you're now recreating the podcast model like satellite radio. So you can't think of doing it without getting your hands on a handful of big guys to do it,” he adds.

SiriusXM needs to add new shows to feed its large podcasting ad sales unit, which accelerated with its acquisition of podcasting company Stitcher in 2020. Greenstein says he looks for shows — he keeps an eye on the top 10 or 20 podcasts in the industry and when their contracts are expiring — that have the potential to grow large, monetizable audiences. He added that the company evaluates metrics like downloads, ad revenue and social media buzz. Those contracts also come with download floors and metrics that podcasts must meet. “We just don't do stupid deals,” he says. “And we won't make deals that don't make sense. That doesn't mean something isn't a gamble, even in a smart business setting But that's the nature of the media business.”

Even before this year's big change, SiriusXM already had a substantial podcasting slate with Ashley Flowers Crime Junkiewhich ranked as the second largest podcast in the US in the second quarter, and Dateline NBCWhich is ranked fifth according to Edison Research. By Alex Cooper Call her fatherAn interview-style podcast with a large base of female listeners, was the fourth most popular podcast in the US in the second quarter, while SmartlessThe sixth was the Celebrity Interview Podcast hosted by Jason Bateman, Sean Hayes and Will Arnett. SiriusXM has distribution rights to the podcast episodes, which are currently widely distributed, and exclusive advertising sales rights.

The exact nature of which show or shows and how many episodes will be behind the paywall is yet to be determined and also depends on the talent's willingness to take the plunge. It could prove a tricky proposition given that Spotify has shed its exclusive distribution strategy for its popular podcasts, including Cooper's, with both the company's upfront costs and talent displeasure at the exclusion of a larger audience a factor.

Greenstein says it's a negotiation similar to the one he had with Stern, where SiriusXM will promise to retain the podcast's creativity by taking talent out of the “ratings rat race” and also offer a compelling financial incentive. “You preserve their creativity exactly the way they want it. You create an economic model that excites them. And at the same time, we're in a position now where that big fan base, if they want to continue it, is the only place they can do it. The only thing that can get is SiriusXM,” Greenstein said.

Beyond serving as a test for potential paywalls and bringing in ad dollars, big podcasts feed into the larger SiriusXM ecosystem, many of which already have streaming radio channels with primary and additional content in the company's SiriusXM streaming app, a new, low-cost ($9.99 monthly) subscription service. Bringing serious content to audiences in and out of the car and attracting younger consumers.

All of these moves come in anticipation of the 70-year-old Stern — SiriusXM's longtime talk radio leader, who has a contract through the end of 2025 — deciding to retire. During that time, the company plans to have a built-up bench of audio talent, including James Corden, Andy Cohen and O'Brien. And that's thanks to Stern's influence. “I chose Sirius because there are so many opportunities to go to different places and grow Call her father On to something bigger,” Cooper said THR. “It's incredible to see what they've done with Howard Stern.”

But Greenstein notes that he hasn't heard from Stern that he wants to leave. “He's been with me and the company has been going for two decades, and so he's quite happy, but he's like a lot of great artists, able to stop whenever he wants. Nobody's going to replace them. We're not going to try to replace them. Whether it's even appropriate, But even practical,” he said. “Anything you want to do, whether it's a sports team or a media company, you want to have a great talent that has its own identity.” Even if he retires, SiriusXM is still several years away Stern's library will own the content, “so we'll always have Howard's voice on our air,” Greenstein added.

The bulk of the company's revenue still comes from the satellite business, while advertising revenue is under pressure in the first half of 2024 amid greater consumer uncertainty. Last quarter, SiriusXM, which also owns music streaming service Pandora, reported revenue of $2.2 billion, down 3 percent year-over-year, with $443 million coming from advertising revenue, which was flat year over year. Ad revenue was under pressure in the first half of 2024 amid broader consumer uncertainty, but podcasting ad revenue remained a strong point.

The number of satellite subscribers at the company has fluctuated, with SiriusXM losing 100,000 subscribers last quarter and about 450,000 in the first half of the year to 31.5 million. That's an improvement from 2023, and the company still has lower average monthly churn, but there are some concerns about long-term downward trends in satellite radio's aging population.

That's where streaming apps (which will compete with Spotify and its 246 million subscribers) and podcasts, as well as other low-cost packages, come in. “We have a very strong core market of customers, which is over 45. And we're not just looking at content, we're looking at different ways to reach, with different pricing and packaging to reach younger demographics,” SiriusXM CFO Thomas Barry said at an investor conference in March.

Barry added, “So we're adjusting our content, as you've seen Smartless. And like I said, with John Mayer and James Corden, we're starting to see some content that will reach younger generations.”

Cooper's podcast network also brings the opportunity to capture a large young female audience, but Greenstein says that wasn't the driving force behind the acquisition. “We couldn't be more excited about that,” he notes. “Having said that, the way we got there was because we signed a real talent who could appeal to that audience, not because we woke up and our mission is 18-to-34 young women and we said, 'Who else? Is that appropriate?' “

In moving from Wondery to SiriusXM, Smartless Media President Richard Corson said the company sees SiriusXM's broader reach across the audio medium as well as its ability to host more live shows and produce additional podcasts throughout the company's three-year deal. . In the short term, he expects to launch two more shows from Smartless Media this quarter and possibly two more in early 2025.

“I think we were excited about the idea of ​​expanding our fan base and all of our shows on Smartless Media,” Corson said. “I'm a firm believer that great audio is great audio, and people use it as part of their media consumption. And Sirius gives us the ability to meet consumers wherever they are, whether it's on satellite radio or a podcasting network.”

Besides the talent-friendly approach and extensive network, Greenstein says part of SiriusXM's pitch is its booking team, which he notes is able to get most of the guests on the show. Kamala Harris appeared recently Call her father And The Howard Stern Showas an example.

The company is also keen to find and develop new talent, such as newly signed Dylan Douglas (son of Michael Douglas and Catherine Zeta-Jones) — who has a political show on the SiriusXM Progress channel aimed at Z listeners — in hopes of growing them later. Smartless or Call her father. These acquisition deals include bringing a network of podcasts under the SiriusXM umbrella, including shows from Cooper's Unwell Network. Hot Mess with Alix Earleand the potential to develop additional shows, all of which make a six-figure acquisition deal more “cost-efficient,” Greenstein said.

Investors are generally bullish on the stock price due to the company's free cash flow, which is projected at $1.2 billion in 2024, due to low capital expenditures. (Warren Buffett's Berkshire Hathaway recently became the company's top shareholder after a stock shakeup that simplified the company's ownership structure.)

But Wall Street also likes cost efficiency. “There's a concern among investors that they're going to go after the younger demos by investing a ton of money and younger-focused talent and that's going to hurt the free-cash-flow story,” said Pivotal Research analyst Jeffrey Lodarczak. Smartless And Call her father Deal At this point, Greenstein says the company is stocking up and stocking the landscape. “It's really hard to find great talent,” he said. “We have great talent, in my opinion, that is available.” However, if another deal comes up, he doesn't rule it out.

A version of this story first appeared in the Oct. 23 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.