Case study
PodcastOne, Inc. (Nasdaq: PODC)
Subsidiary spin-out, direct listing, Nasdaq debut and the creation of the first pure-play public podcast company
- Securities law
- Corporate law
- Public companies
- M&A
Overview
Foley Shechter Ablovatskiy LLP ("FSA") advised our long-term client LiveOne, Inc. on the spin-out and direct listing of its subsidiary PodcastOne, Inc. (Nasdaq: PODC) — one of the largest podcast networks in the United States — as a standalone, publicly traded company on the Nasdaq Capital Market.
The transaction involved a complex, multi-layered corporate restructuring of a majority-owned subsidiary, bridge financing, multiple rounds of debt repayment to strengthen the balance sheet, a special stock dividend to existing public company stockholders, and a direct listing on Nasdaq — an alternative approach to going public.
The spin-out was the first of its kind where a majority interest in a subsidiary was spun out, resulting in that subsidiary being listed on Nasdaq. As the first and only pure-play publicly traded podcast company, PodcastOne's listing created a new category in the public markets for podcast-focused investment.
The clients
PodcastOne
PodcastOne is a Los Angeles-based podcast network co-founded in 2012 by Kit Gray, President of PodcastOne. PodcastOne delivers over 2.1 billion downloads per year across a community of more than 250 top-tier podcasters, including Adam Carolla, Jordan Harbinger, Kaitlyn Bristowe, Dr. Drew Pinsky, and A&E's Cold Case Files, with 14 million or more monthly unique listeners and 350-plus hours of content distributed weekly.
Prior to the spin-out, PodcastOne operated as a wholly owned subsidiary of LiveOne, Inc. (Nasdaq: LVO), a publicly traded music, entertainment, and technology platform.
The transaction
LiveOne sought to unlock shareholder value by spinning out PodcastOne under the ticker PODC. The structure involved several complex, simultaneous components.
[01] SEC Registration (Form S-1)
[02] Direct Listing
FSA managed the restructuring of PodcastOne's convertible debt, including LiveOne's $3M repayment to strengthen the balance sheet. Post-listing, an additional $6M in bridge notes (including LiveOne's investment) was converted into common stock. By late September 2023, PodcastOne was debt-free, increasing its net equity by $6M.
[04] Special Stock Dividend / Distribution
[05] Bridge Financing (Private Placement)
[06] Nasdaq Compliance, Controlled Company Governance & Post-Listing Rebrand
Complexity & challenges
This transaction presented an unusually high degree of legal and structural complexity over a timeline spanning more than a year. Key challenges included:
- [01]
Managed a multi-stage SEC review and coordinated evolving Nasdaq listing requirements over an intensive year-long timeline to secure S-1 effectiveness.
- [02]
Navigated the complex direct listing format without an underwriting syndicate, managing all SEC disclosures and investor communications internally.
- [03]
Pioneered a first-of-its-kind spin-out, guiding Nasdaq through the unique process of listing a majority-interest subsidiary as a standalone company.
- [04]
Mitigated bridge note redemption risks by managing real-time legal and financial deadlines to prevent mandatory payouts during listing delays.
- [05]
Restructured the special dividend ratio multiple times (from 5% to 19%) to satisfy Nasdaq's public float rules while maintaining parent control.
- [06]
Executed post-listing corporate actions, including debt conversion, a formal name change, and M&A pipeline activity within weeks of the debut.
Result
The transaction closed successfully.
PodcastOne completed its direct listing and began trading on the Nasdaq Capital Market on September 8, 2023, ringing the Nasdaq opening bell, with shares opening at a minimum of $8 per share.
LiveOne's ownership of PodcastOne increased to approximately 81% following the post-listing bridge note conversions.
The company emerged from the transaction debt-free, with net equity increased by $6 million through the full conversion and repayment of its bridge notes. As the first and only pure-play publicly traded podcast company, PodcastOne's listing created a new category in the public markets for podcast-focused investment.
Why this matters for prospective clients
This transaction illustrates FSA's ability to handle the full spectrum of corporate, securities, and M&A legal work required when a public company seeks to create independent shareholder value through a subsidiary spin-out.
From initial S-1 drafting and SEC review through Nasdaq compliance, bridge financing, balance sheet restructuring, controlled company governance, and post-listing corporate actions, our attorneys bring hands-on experience managing the real-world complexity of taking a company public — including through non-traditional structures such as direct listings.
If you are a public company, founder, or investor considering a spin-out, direct listing, IPO, private placement, or related securities or M&A transaction, we welcome the opportunity to discuss how we can help.
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