IHeartMedia’s Triton Digital Acquisition Will Consolidate Its Dominance Of Ad-Based Audio

iHeartMedia
IHRT
yesterday announced that it is acquiring Triton Digital, a digital audio publishing, advertising, and audience measurement business, from E.W. Scripps
SSP
for $230 million. This is far from the first acquisition that iHeart has made in the digital audio infrastructure space, but it’s unique in that it will help iHeart tie together its various lines of business and consolidate its leadership position in many of them.

Most people know iHeartMedia for its iHeartRadio app, which plays Internet streams of AM/FM radio stations, many of which iHeartMedia owns. But iHeartMedia is really in several interrelated lines of business. It’s the largest owner of broadcast radio stations by a wide margin, with over 850 of them nationwide. It’s the podcast publisher with either the No. 1 or No. 2 biggest aggregate audience (it alternates with NPR). Its app is the most popular place for Internet streams of broadcast stations and the No. 2 Internet radio app overall (Pandora is No. 1). The app also has an on-demand music feature similar to Spotify and a custom Internet radio feature similar to Pandora. And iHeart has tools for other podcasters, broadcasters, and Internet radio streamers that enable it to make money from its competition.

Triton Digital operates a variety of services for digital audio distributors, including podcast publishing, audio content delivery networks, ad targeting, and audience measurement. It’s an infrastructure player whose name is not exactly a household word; it’s probably best known for being the co-developer (with Edison Research) of the Infinite Dial, a highly influential digital media consumer research study that started out over two decades ago focusing on digital radio.

Triton will help iHeart in most of its lines of audio business, but most importantly, it will enable it to tie together its broadcast radio, streaming radio, and podcast businesses on the advertising side. Apart from its content, iHeartMedia’s most potent resource is its ad sales capability, including a nationwide sales force numbering in the thousands—larger than anyone else in the digital audio space and an order of magnitude larger than anyone else in podcasting. It sells ad inventory on broadcast radio, streaming radio, and podcasts to major advertisers. But it hasn’t been able to package these media together into single ad buys with integrated audience measurement and analytics.

Each of these three media has its own advertising ecosystems. Broadcast radio’s dates back decades, but iHeartMedia has technology (through the startup Jelli, which it acquired in 2018) that enables advertisers to make programmatic buys of targeted ads on its AM/FM stations in real time. When users listen to Internet streams of iHeart’s broadcast stations on iHeartRadio, iHeart sends them individually targeted ads that play instead of the ads that air on the AM/FM signals. And on podcasts, iHeart places targeted ads in each podcast episode at download time. (Although most users listen to podcasts on demand via “streaming” nowadays, it’s not really streaming as in Pandora or Spotify; it’s actually progressive download, meaning that the download starts when the user clicks Play and finishes while the podcast runs.)

Each of these ad-placement scenarios requires different technology for targeting, delivery, and measurement of audience impact. But Triton Digital’s technology stack ties them all together. It enables iHeart to sell an ad package to, say, Walmart
WMT
or Toyota that optimizes targeted ad delivery and aggregates audience measurement across all three media.

Triton Digital’s customers include many of iHeart’s direct competitors, such as NPR, Cumulus Media
CMLS
, Entercom, ESPN, and Univision. iHeart intends to let Triton Digital continue offering services to them (and, of, course, make revenue for itself in the process). But none of these companies have iHeart’s impact in all three areas of “companionship audio”—a term that the company uses to differentiate what it does from music services like Spotify, meaning audio with talk and other non-music content.

For the past couple of years, iHeart has been investing heavily in its strategy of podcasting that embraces ubiquity and ad revenue—as opposed to the strategy led by Spotify (and more recently Amazon
AMZN
) that’s focused on exclusive content and subscription revenue. The Triton Digital acquisition will help cement iHeart’s leadership in podcasting by tying it together with streaming and broadcast radio as only iHeart can. But other visions of podcasting that are tied together with music and paid subscriptions are being developed by companies that are stronger in those areas than iHeartMedia is.

As for E.W. Scripps, Triton Digital was its last remaining property in digital audio after it sold the podcasting company Stitcher to Sirius XM satellite radio last summer. The sale of Triton to iHeart leaves Scripps exclusively in its core broadcast and cable television business. In a sense, the deal puts all of those podcasting and digital radio assets under one roof, as both iHeart and Sirius XM
SIRI
are plurality-owned by John Malone’s Liberty Media
FWONK
. Given that Sirius XM also owns Pandora, this gives Liberty Media more firepower to go up against Spotify and Amazon in the fast-developing digital audio market.