Why is SmartLess worth more than TMZ?
When FOX recently acquired TMZ for $50 million, the person who broke the story — The Hollywood Reporter’s Alex Weprin — emphasized how low the price was by contrasting it with “niche podcasts selling for more money.” While I wouldn’t necessarily describe The Joe Rogan Experience, Armchair Expert, or Call Her Daddy as niche, Weprin was justified in pointing to their surprisingly high price tags: how is it that temporary rights to a single podcast are worth more than a 16-year-old institution of celebrity gossip?
SmartLess was the most recent podcast to surpass TMZ’s sale price, with Amazon agreeing to pay $20 to $26 million annually over the course of three years, according to Lucas Shaw’s reporting for Bloomberg. It’s the latest in a string of big-budget deals that picked up after Spotify paid Joe Rogan a reported $100 million in May 2020, itself a big jump from the two-year, $10 million deal between My Favorite Murder and E.W. Scripps the year before.
Why the hefty price tag for SmartLess? Advertiser enthusiasm, suggests Shaw. Even though the podcast only launched last summer, it’s hosted by Will Arnett, Jason Bateman, and Sean Hayes, who have good rapport and seem excited to be there, and the show has yet to have anything scandalous arise from its conversations. Shaw says the appeal to potential sponsors is strong.
“I think SmartLess is a very advertiser-friendly show,” Shaw tells me. “It’s three famous people just kind of yukking it up with people they like and their friends,” making it “unlikely that it would be in any way troublesome for advertisers.”
I reached out to six SmartLess sponsors to ask why they went with the show, but none wanted to talk. Even so, one can see the appeal: while SmartLess is fawning over Fred Armisen’s contributions to SNL, TMZ is breaking the news of alleged affairs. “TMZ is a little tricky because they specialize in types of news that I would say are... difficult to monetize,” says Shaw. “Their output is not the most advertising friendly.”
The SmartLess deal gives Amazon a one-week window to publish episodes before they go up elsewhere, as well as first-look rights for future projects. Critically, it also gives Amazon full control over the show’s ad sales. That, of course, leaves Amazon the opportunity to plug any of its own products and services, but one also assumes ad spots on SmartLess will yield a pretty penny: AdvertiseCast pegs average CPM for a 30-second podcast ad at $18, while social media display ads appear to bring in less than half that per thousand impressions, and Shaw reported SmartLess as having millions of listeners at the time of the deal. That means Amazon’s bet — that big advertiser dollars will outweigh any potential losses from loss of exclusivity — might be pretty solid.
It might not actually matter that SmartLess is less scandalous than TMZ. The Joe Rogan Experience is provocative, too, and ZipRecruiter still advertises on that show, just like it does on SmartLess. Amazon invested with the idea that it could capitalize on podcasting’s hyped ad market, and, as Shaw says, “the numbers just keep going up because whoever’s shopping it wants to top the previous deal.”
“There’s a tremendous land grab going on at the moment for podcasts and content more generally — call it the Netflix effect,” says Scott Ehrlich, corporate partner and head of mergers and acquisitions at the law firm Sklar Kirsh. Ehrlich helped facilitate, among other things, SiriusXM’s acquisition of 99% Invisible Inc., a sale he says didn’t surprise him. “In that case, Sirius, they’re looking to be a one-stop shop to justify their subscription, and I say that as a guy who’s a subscriber to Sirius. I’m delighted that I’m getting more for my dollar.”
When looking at more recent deals, like between Amazon and SmartLess, he says, “I’m not sure the valuation of any of these podcasts is tied to traditional metrics.”
“Amazon’s not playing with real money these days,” he adds. “I think it’s a land grab. They’re building for the future.”
Post note: The jury’s still out on what advertisers might think of TMZ’s new podcast, which launched Wednesday.
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