SCHEDULE 13D: Galloway Capital Partners Discloses 2.28% Stake in PodcastOne, Urges Strategic Review for Shareholder Value

Galloway Capital Partners, LLC and Bruce Galloway have disclosed a 2.28% beneficial ownership stake in PodcastOne, Inc., advocating for a strategic review including potential sale or merger to unlock shareholder value.

Summary

• Galloway Capital Partners, LLC and Bruce Galloway have acquired 569,500 shares of PodcastOne, Inc. common stock, representing 2.28% of the class.
• The shares were purchased in open market transactions from November 2023 through April 2025, at an approximate average price of $2.25 per share.
• The reporting persons believe PodcastOne's share price is undervalued and trades at a significant discount to its revenues and intrinsic value.
• They note that peers in the fast-growing podcast sector have been acquired at multiples of up to 10x revenues.
• Galloway Capital Partners intends to engage PodcastOne's Board and management to explore options to enhance shareholder value, including a potential sale, merger, or acquisition.
• They may also consider changes related to the Issuer's performance, operations, management, governance (including the Board), conflicted party transactions, capital allocation policies, and strategy.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive from an investor's perspective, as the filing highlights a belief in significant undervaluation and potential for value creation through strategic action. However, it implies a negative assessment of the company's current market valuation and potentially its strategy, which could be seen as a negative for existing passive shareholders.

Positives

• An activist investor, Galloway Capital Partners, has taken a significant stake, indicating a belief in the company's underlying value.
• The investor believes PodcastOne's share price is "undervalued" and trading at a "significant discount to its revenues and intrinsic value."
• The podcast industry is identified as a "fast-growing segment of the media sector."
• Traditional media companies are actively acquiring podcast companies, suggesting a strong M&A environment.
• PodcastOne is considered "one of the most visible companies in its sector."
• The investor is urging management to explore strategic options like a sale, merger, or acquisition, which could unlock significant shareholder value.

Negatives

• The reporting persons explicitly state that the company's share price is "undervalued" and trading at a "significant discount," implying current market perception or operational performance is suboptimal.
• The filing indicates potential dissatisfaction with current management, governance, or capital allocation, as the reporting persons intend to engage the Board and management on these matters.

Risks

• Potential for activist investor pressure on management and the Board, which could lead to strategic shifts or internal disagreements.
• The company's share price is perceived as undervalued, which could reflect underlying operational challenges or market skepticism.
• Failure to execute a strategic alternative (e.g., sale, merger) could lead to continued undervaluation or investor disappointment.

Future Outlook

Galloway Capital Partners intends to continuously review its investment in PodcastOne and may acquire additional securities or sell existing holdings based on various factors including the Issuer's business, financial condition, and market conditions. They plan to engage the Board and management to explore strategic alternatives such as a sale, merger, or acquisition to enhance shareholder value, believing the company is currently undervalued.

Management Comments

• "The Reporting Persons believe the Company's share price is undervalued and trading at a significant discount to its revenues and intrinsic value."
• "Several of its peers have been acquired at multiples of up to 10x revenues."
• "Podcasts are a fast-growing segment of the media sector and traditional media companies are acquiring podcast companies."
• "We believe the Company is one of the most visible companies in its sector."
• "We urge the management of the Company to retain an investment bank or strategic advisor to explore options to enhance shareholder value through a sale, merger or acquisition."

Industry Context

The announcement highlights the dynamic nature of the podcast industry, which is described as a fast-growing segment within the broader media sector. It notes a trend of traditional media companies acquiring podcast companies, suggesting a robust M&A environment and strategic interest in the space. PodcastOne is positioned as a visible player within this sector.

Comparison to Industry Standards

• The reporting persons state that "Several of its peers have been acquired at multiples of up to 10x revenues." This suggests that PodcastOne's current valuation is significantly below what comparable companies in the podcast sector have achieved in M&A transactions. No specific comparable companies or projects are named in the document.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for significant value enhancement if strategic alternatives (sale, merger, acquisition) are successfully pursued, or if management responds positively to activist pressure. Conversely, uncertainty during strategic review.
• Management & Board: Increased scrutiny and pressure to address undervaluation and explore strategic options. Potential for changes in leadership or governance.
• Employees: Potential impact from any future merger, acquisition, or significant strategic shift, which could involve restructuring or changes in company culture.
• Competitors: The potential for M&A activity involving PodcastOne could alter the competitive landscape in the podcast sector.

Next Steps

• Galloway Capital Partners intends to review its investment in PodcastOne on a continuing basis.
• The reporting persons may acquire additional securities or sell existing holdings.
• They intend to engage PodcastOne's Board and management regarding the company's performance, operations, management, governance (including potential Board changes), conflicted party transactions, capital allocation policies, and strategy.
• They urge management to retain an investment bank or strategic advisor to explore options to enhance shareholder value, such as a sale, merger, or acquisition.

Key Dates

Recommendation

Keywords

PodcastOne, PODC, Galloway Capital Partners, Bruce Galloway, Schedule 13D, activist investor, shareholder value, undervaluation, merger, acquisition, strategic review, media sector, podcast industry, corporate governance, capital allocation