Can Alex Cooper and the ‘Dad Gang’ Help Save This Warren Buffett Stock?

What does a 30-year-old podcast star have in common with a 94-year-old investment legend? On the surface, not much.

Alex Cooper rose to fame by creating it Call him dad podcast, which interviews high-profile celebrities and focuses on a range of topics including sex, relationships and mental health.

Warren Buffett, on the other hand, made a name for himself through the conglomerate he ran for decades, Berkshire Hathawayand its equity portfolio of more than $300 billion. Buffett is known as one of the best stock pickers of all time.

However, the two individuals are now closely intertwined. Satellite media company Sirius XM Holdings (SIR 3.87%) just signed Cooper and her podcast, as well as her growing podcast network, to a deal worth up to $125 million over the next three years. Sirius XM also happens to be the 16th largest holding in Berkshire’s stock portfolio. Berkshire began buying shares in 2016 and now owns about 31%.

The stock did not perform well. It’s down nearly 50% from where it went public in 1994 and about 62% over the past five years. Can Cooper and her devoted fans, known as the “Daddy Gang,” help save Buffett’s stock?

Rekindling subscriber growth

Sirius XM is a large audio company that boasts a combined monthly audience of 150 million listeners. You may know it best from its classic satellite radio services, but the company also owns the digital music streaming service Pandora and has a growing podcast network as well.

As you might expect, the company makes most of its money from subscriptions. In the second quarter, it generated about 76% of total revenue from subscribers. The problem is that quarterly subscriber revenue has declined. And according to Visible Alpha, consensus estimates for where earnings are headed (in red on the chart below) don’t exactly point to massive growth over the next few years.

Data source: Visible Alpha. Chart by author.

Cooper and Call him dad the podcast may be helpful. The deal will give Sirius exclusive advertising and distribution rights to Cooper, as well as other content creators on her network, such as Alix Earle and Madeline Argy, both of whom have millions of followers on various social media platforms. Although exact numbers are hard to confirm, Cooper has 5 million weekly listeners. Call him dad it was from Spotify the second largest podcast of 2023, behind only Joe Rogan.

Sirius XM CEO Jennifer Witz told an industry conference that attracting talent like Cooper will help attract a younger audience and provide more opportunities for advertisers on the company’s platform, including live events, video and social networks. Cooper came to Sirius after closing a three-year, $60 million deal with Spotify. Interestingly, at Spotify’s 2022 Investor Day, management emphasized that by streaming video of its episodes, Call him dad doubled its audience from its audio-only episodes.

Call him dad it’s not the only big podcast that Sirius brings. The company also signed Unintelligent with Jason Bateman, Sean Hayes and Will Arnett in a $100 million deal and will air a weekly show with the former governor of South Carolina and ambassador to the UN Nikki Haley. Analysts seem to like the new strategy, with a recent update citing improving subscriber trends.

Can a podcast save the day?

At Spotify’s 2022 Investor Day, Tony Jebara, vice president of engineering and head of machine learning, said the company can look at the lifetime value of individual podcasts, specifically related to their impact on the bottom line, and divide that number by the cost to purchase and promote the show. “And we’re only going to focus on renewing shows that have a big return on business,” he said.

Given this statement, one could conclude that Call him dad did not make the price cut Cooper was seeking to renew his contract. That said, Spotify has changed its strategy. And the company has done well since Cooper took over in 2020, not that the success can be entirely attributed to her. Between 2020 and 2023, Spotify has achieved a 15% compound annual growth rate of premium subscribers, with a total of 236 million at the end of 2023. Spotify’s stock has risen nearly 200% over the past five years.

While Sirius XM has issues to contend with, including a heavy debt load, ultimately I think its current strategy makes sense. Making its services more appealing to listeners will go a long way, and podcast offerings like the one with Call him dad it could help rejuvenate the company’s reputation and introduce its services to a new subscriber base.