SiriusXM Reaches Out Of The Car With Pandora Acquisition

“The combination of SiriusXM and Pandora could have a huge impact on digital streaming. At least under the Music Modernization Act, which just passed Congress, we know both services will have to pay fair rates to all of the artists and songwriters whose music they play.” —Conversations In Advocacy #37

SiriusXM announced its intent to acquire music service Pandora Media on Sept. 24 in an all-stock transaction valued at $3.5 billion. Back in June 2017, SiriusXM took a 19 percent stake in Pandora for $480 million, and this marriage proposal represents a fresh vote of confidence in its future prospects.

"The addition of Pandora diversifies SiriusXM's revenue streams with the U.S.'s largest ad-supported audio offering, broadens our technical capabilities, and represents an exciting next step in our efforts to expand our reach out of the car even further," said SiriusXM CEO Jim Meyer.

While surrounded by speculation about the different directions the combined entity might pursue, Meyer also said, "We're going to concentrate a lot on making sure that Pandora and SiriusXM go together successfully."

From afar, the satellite radio giant offers business stability and deep pockets to the relationship while Pandora opens up potential internet innovations, including its recently developed online advertising platform. Dicey details remaining to be worked out include bottom-line royalty payments and whether SiriusXM's majority owner, Liberty Media, might have synergy plans to tie-in with its stake in Live Nation.

Meyer was reassuring that management isn't looking for a tussle with record labels and said, "Quite candidly, we need them for our product to be successful."

But the companies' headline-boast that their combination will be the "world's largest audio entertainment company" remains to be seen, although SiriusXM's 36 million paid subscribers in the U.S. plus 23 million trial-users isn't up for debate and produced more than $6.8 billion in 2017 revenue.

Pandora's community is a bit trickier to quantify with a total of 70 million users of which 5.5 million are considered subscribers, but those are divided between its radio service and its pricier on-demand, premium tier. Pandora's data on user preferences goes deep and in combination, appealing and unique content offerings from the two are expected.

Regulatory approval is still needed for the deal to be consummated, and there is a waiting period during which other corporate suitors could top SiriusXM's offer. If the deal goes through, the combined companies would be large enough for observers to bill them as a potential Spotify competitor, but that might be missing the point. Spotify's hard-won scale competes with Apple Music, Amazon and YouTube, all of which have mighty platforms behind them. Apple's purchase of Shazam coincidentally closed on the same day the SiriusXM-Pandora deal was announced.

While it's understandable to be impatient for new creative content offerings to begin, the deal is unlikely to close until the first quarter of next year and regulatory delays are possible. Meyer said, "We're a sizable piece of the ecosystem," and that's true. But the real hope has to be that this marriage stays music-friendly and finds creative success making "audio entertainment" even more millions can look forward to.

Thank Your Lawmakers For Historic Achievement Of Passing The MMA

"Conversations in Advocacy" is your weekend digital tip sheet on music advocacy and the policies that affect music makers and their craft. New installments post every Friday.

SiriusXM Reaches Out Of The Car With Pandora Acquisition

Assistance