iHeartMedia + SiriusXM merger | Matt Connarton Unleashed

0:00 iHeartMedia and Serious XM possibly merging. This is a big deal. You know. We've seen in the radio industry so much consolidation over the past twenty twenty five years, and it looks like there's about to be even more of it. If you're not familiar with Serious XM, of course, I mean they had merged. There used to be at one time there were two satellite radio companies, Serious and XM. Serious Satellite Radio and XM, and then they merged and became Serious XM. And now iHeartMedia, which used to be what did they used to be starts with a C clear channel, took me a second clear channel, ended up becoming iHeartMedia.

0:42 They're the biggest largest owner of radio stations across the United States, so they're a big deal. They also have a podcasting platform. But iHeartMedia is in talks to be acquired by Serious XM holdings. I'm surprised it's not the other way around. But let's take a look at this. You know, sirius, they've been in a lot of financial trouble for a long time because the thing about satellite radio and what was it about, you know, early two thousands when when it became a thing. The thing about satellite radio is great idea.

1:17 You know, you've got you've got a satellite radio transponder in your car, and then you've got all these different channels you can listen to. And of course the big draw for serious XM is Howard Stern, the biggest draw, or at least was. I don't know if he still is, but but he he very well maybe, And uh, so you could listen to all this stuff uncensored because it's satellite, so it's not not controlled by the FCC in terms of regulating what you can say and can't say and the music that you play, and in terms of profanity and so forth.

1:48 So it's completely uncensored and uh, commercial free, or at least when it launched. That's not the case anymore. But but you know it was, uh, I don't know where that tone came from or if that showed up on the recording that deeming anyway, somewhere on this computer, something's making a noise, but regardless. So the problem though that satellite radio ended up running into that I guess nobody saw coming was the rise of streaming and podcasting. So the Internet is kind of I think for especially for younger and younger generations who are listening to terrestrial radio much less and less and are listening to streaming streaming platforms, are watching streams and podcasts and so forth.

2:34 That's why everything that we do, you know, the shows that we do here at WM and H. Of course, just like every other radio station, they also are podcasts there. They're streaming live as we do them. You know, you're not just listening into your car. Obviously, we have listeners all over the world because they stream the show and then after I get off the air today, I will upload the podcast. Then it becomes a podcast and you can stream the podcast on demand, you can download it whatever, so you can watch it online on social media.

3:03 So you know, so the radio industry has had to adapt in that way. But it kind of the rise of streaming and podcasting really took a big bite out of the whole appeal and the whole point of satellite radio, right because now everyone streams in their cars. So here's what's happening right now. And I'm almost surprised that nothing like this has happened or been talked about sooner, at least that I'm aware of. But it says here and this is from Music Businessworldwide dot com, which again is a great site.

3:37 I read an article from it earlier in the show Great Side for Music Industry News. It says iHeartMedia is reportedly in preliminary talks to be acquired by Serious XM Holdings in a deal that would bring together two audio giants under pressure from on demand streaming platforms. And again that's what I was talking about. On demand streaming has really just taken a huge bite. Obviously it's affected radio terrestrial radio AM and FM radio, but it's also had a huge effect on satellite radio. This is according to Bloomberg, which reported over the weekend, citing people familiar with the discussions, that the talks are still at an early stage and may not result in a deal.

4:18 Representatives for both companies decline to comment to Bloomberg. Music executive Irving Azoff has been working with Apollo Globe Management on proposals to merge the two companies. The report said a combined entity would generate more than twelve billion dollars in annual revenue. According to Bloomberg on Tuesday, April twenty eight, iHeartMedia shares rose I don't want to get into the numbers. I'm gonna skip down a little bit. iHeartMedia operates more than eight hundred and sixty radio stations across one hundred and sixty markets.

4:51 That's how big. Again, it used to be Clear Channel. Clear Channel used to be at the giant that it became iHeartMedia. I don't remember how it became iHeartMedia. I don't remember member if there was a merger and they needed a new I don't remember the details of that. But it just used to be Clear Channel, if that makes sense. But again, they operate eight hundred and sixty radio stations across one hundred and sixty markets across the country, while SERIOUSXM, which operates a satellite radio service primarily for in car use, although you can you can put the app on your phone or any mobile device, a streaming app, and the SERIOUSXM podcast network, reaches a combined monthly audience of about one hundred and seventy million listeners.

5:33 So the subscriber base for satellite radio is still very large. I mean, one hundred and seventy million listeners is a lot, it says here. Bloomberg said. Both companies, despite being the dominant players in their respective businesses, are struggling to attract new customers and compete with streaming platforms like Spotify and Apple Music. To better compete with these digital service providers, SERIOUSXM in July twenty twenty five, I've launched a new lower priced ad supported tier called Serious XM Play, priced at less than seven dollars a month.

6:08 That same two years after Serious XM launched a nine to ninety nine a month Spotify challenger. The reported merger comes as more people listen to podcasts daily than to talk radio programming, Bloomberg said, citing Edison research. Both companies have tried to adapt, with SERIOUSXM acquiring online radio service Pandora in twenty eighteen for three and a half billion billion with a B, introducing a new app, and locking up exclusive distribution rights to podcast like SmartLess and Call Her Daddy.

6:39 iHeartMedia has also built on its own podcast operation, distributing shows like My Favorite Murder, The Breakfast Club, and Las Culturistas. The company's podcasting revenue grew twenty six percent in twenty twenty five, while radio revenue fell four percent. In December, iHeartMedia partnered with Netflick for an exclusive video podcasting partnership that includes all new episodes from the company's podcast lineup. The company carries about five billion dollars in total debt following a bankruptcy in twenty eighteen, said Bloomberg.

7:13 Wait, who's oh, iHeartMedia? So iHeartMedia has five billion dollars in debt following a bankruptcy in twenty eighteen. And by the way, for anyone who's confused about the bankruptcy thing, bankruptcy doesn't mean you go out of business necessarily. It may mean that your debt becomes restructured, but you continue. There's different types of bankruptcy and so forth. For anyone who's puzzled by how can they have gone through bankruptcy and still be operating, it says here. The continued growth in the podcast business prompted other digital service providers and social media platforms to expand their presence in the market.

7:49 In October, Netflix and Spotify struck a deal for Netflix to stream video podcasts from Spotify Studios and The Ringer starting this year. Earlier in March, Spotify partnered with Hibe to put is that how you say that? Hybe Hibe to put? I'm not familiar with it? To put original K pop video podcasts on their streaming platform. In January, Spotify launched a new podcast studio in Hollywood. Okay, da da da da. So this's all this stuff they've been doing. But anyway, the point is this merger, it's very early, may not even happen, we'll see.

8:20 But more consolidation, My opinion is more consolidation in the radio industry is not particularly a good thing, but inevitable. There's sure been a lot of it.