Podcast Companies Face Layoffs, Budget Cuts and Scuttled Deals

When the celebrity-backed media company Religion of Sports — founded by Tom Brady, Michael Strahan and Gotham Chopra — debuted in 2018, getting into the podcast business seemed like a no-brainer.

The company was eager to capitalize on an “openness to experimentation” on the part of investors, its chief executive, Ameeth Sankaran, told TechCrunch. And podcasts were hot — “S-Town,” a new series from the creators of “Serial,” had just scored a record 40 million downloads in its first month, while Gimlet Media, a start-up aiming to become “the HBO of audio,” had collected $27 million from Silicon Valley.

After producing film documentaries like “Tom vs. Time” and “Shut Up and Dribble,” Religion of Sports launched its first podcast, “Now for Tomorrow With Deepak Chopra,” hosted by Gotham’s father, in 2020. It quickly put several more shows into development (five have been released, including “In the Moment With David Greene” and “False Idol”) and hired more than a dozen audio producers for shows ranging from talk programs to scripted drama.

But after a faltering advertising market and fears of a looming recession began battering the media and technology sectors in 2022, executives at Religion of Sports made an about-face. Early last month, the company’s podcast employees were informed that they had been laid off and that the audio division would shutter, according to two employees familiar with the decision. They spoke on the condition of anonymity because they feared violating a severance agreement. Sankaran didn’t respond to multiple requests for comment.

The demise of Religion of Sports’s audio ambitions is the latest sign of frost settling over the once sizzling podcast industry. Spotify has spent more than $1 billion in recent years acquiring production companies and signing exclusive deals with celebrities like Joe Rogan and Kim Kardashian. But in January it reduced podcast staff for the third time in five months, and the company’s chief content officer, Dawn Ostroff, resigned.

Two other prominent podcast publishers, Vox Media and Pushkin Industries, also announced layoffs last month. And Amazon, SiriusXM, NPR and Spotify have all curbed podcast budgets in the last year, sometimes allowing expensive deals to sunset or canceling others before they closed.

“The dumb money era is over,” said Eric Nuzum, a podcast strategist and co-founder of the independent studio Magnificent Noise. “People had been throwing money at things just to see if they could get in and scale up audience quickly, but now everyone’s being a little bit more conservative.”

Although many companies continue to invest in podcasts, and overall downloads continue to rise, interviews with a dozen current and former podcast producers and executives indicated increased reluctance among publishers to fund projects with no obvious path to short-term profitability. Short-run or seasonal narrative podcasts, which have a limited window to build audiences and attract advertisers, are under especially sharp scrutiny.

At NPR, even long-running and successful shows like “Planet Money” have pulled back on resource-intensive reporting and relied more heavily on reruns in order to cut costs.

“The name of the game has been to ‘do less with less’,” said a producer at the company, who asked to remain anonymous because he was not authorized to discuss the issue publicly. NPR announced a hiring freeze last November, and its summer intern and fellowship programs have been paused indefinitely.

Strong growth in podcast listening and aggressive maneuvering from deep-pocketed companies helped drive the original gold rush. Since 2014, the year “Serial” debuted, the percentage of Americans 12 and over who have listened to a podcast has jumped to 62 percent from 30 percent, for a total of 177 million, according to a report released last year by the analytics firm Edison Research. In 2018, Spotify began acquiring the exclusive rights to podcasts to attract new users and diversify its business. Amazon followed suit, stocking up on original and exclusive podcasts for its services Audible and Amazon Music.

Payouts for content publishers soared. Spotify paid $230 million for Gimlet Media in 2019 and around $200 million more for The Ringer, Bill Simmons’s sports media company, in 2020. Later that year, as consumers spent even more time listening to podcasts during the pandemic, Amazon bought the popular podcast studio Wondery for $300 million, while SiriusXM paid $325 million for the platform and publisher Stitcher.

Individual podcasts with popular hosts fetched similarly lofty sums. Spotify spent more than $200 million for “The Joe Rogan Experience” in 2020 and $60 million for Alex Cooper’s “Call Her Daddy” in June 2021. That same month, Amazon paid up to $80 million for “Smartless,” hosted by the actors Will Arnett, Jason Bateman and Sean Hayes, according to Bloomberg.

In addition to traditional advertising, the platforms hoped to recoup their investments through strategies including premium subscription offerings and intellectual property deals with Hollywood. But audiences have been slow to sign up for paid subscriptions to content they’re accustomed to getting for free, and film and television development — a notoriously inexact science — hasn’t proved to be a reliable moneymaker.

Last year, as macroeconomic factors cooled ad spending, darkening forecasts at both new content businesses, like Facebook, and traditional ones, like Warner Bros. Discovery, formerly rosy-eyed podcast executives began hitting the brakes.

“The first thing marketers do when they anticipate a downturn is cut their budgets,” said Brad Adgate, an independent media consultant. “If advertising is your primary source of revenue, you’re looking at the next quarter’s earnings report and trying to figure out how to hit your numbers.”

In April, Spotify declined to renew its licensing deal with the Obamas’ Higher Ground Productions — maker of “The Michelle Obama Podcast” and “Renegades: Born in the USA,” with Barack Obama and Bruce Springsteen — and it later canceled 11 other original shows. (Higher Ground announced a new deal with Amazon last June.)

One high-profile casualty was a podcast by the “Dawson’s Creek” star James Van Der Beek. In July 2022, SiriusXM’s Stitcher canceled plans for a retrospective show that was to be hosted and produced by the actor, who promptly sued the company for breach of contract.

A spokesman for SiriusXM declined to comment. But the company’s publicly available response to the suit argues that “no written agreement was ever executed by the parties, and no binding agreement was consummated.”

According to a person familiar with Stitcher’s side of the talks, who discussed confidential negotiations on the condition of anonymity, the publisher got cold feet about the program, for which it would have paid Van Der Beek a minimum of $700,000 and 50 percent of net ad revenue, after several of its podcasts missed income projections.

“We were seeing shows that might have had a sell-through rate of 70 percent coming in at more like 50 percent,” the person said, referring to the percentage of available inventory the company sells to advertisers.

Stitcher executives were additionally concerned by challenges specific to the Van Der Beek podcast. The actor had preemptively ruled out advertisements for certain mattress companies and other popular product categories and expressed a desire to structure the show around the broader themes of “Dawson’s Creek,” a format that the publisher viewed as less commercial than a traditional episode-by-episode recap formula.

In an interview, Van Der Beek confirmed the brand exclusions and his intention to create a “nontypical podcast” that would “contribute something new to the space.” But he said ad executives at Stitcher had agreed to his vision.

“After 30 years in this business, I know that you don’t get to do the creative if you don’t make money,” he said. “I enjoy working with brands and I love adding value.”

Some podcast analysts argued that cutbacks are part of the natural cycle of a new medium’s evolution.

“Less direct investment in content isn’t necessarily a sign of trouble,” said Lauren Jarvis, the former head of content partnerships at Spotify, who oversaw the Joe Rogan acquisition and other deals before she left the company in 2021. “It could mean that the industry has hit a growth stride and can adjust to a more sustainable investment model.”

Nuzum, of Magnificent Noise, found cause for optimism in the fact that overall demand for podcasts is up. A recent report from the analytics firm Triton Digital found that podcast downloads in the U.S. rose 20 percent last year over the year before.

“If the audience is there, that’s the real sign of health,” Nuzum said. “The business will figure itself out.”