Print Edition - 2018-09-26 | MONEY
SiriusXM buys rival Pandora for $3.5 billion
- Streaming music wars
Sep 26, 2018-
Satellite radio titan SiriusXM unveiled plans on Monday to acquire online rival Pandora for $3.5 billion, ramping up competition in the streaming music market dominated by Spotify and Apple.
The all-stock deal creates “the world’s largest audio entertainment company,” with some $7 billion in revenues, according to a statement from the two firms.
SiriusXM, the leader in subscription radio in the United States serving mainly motorists with music and news channels, sees the acquisition as an opportunity “to significantly expand its presence beyond vehicles into the home and other mobile areas,” it said.
The move could create a strong competitor to streaming music leaders Spotify and Apple.
“We have long respected Pandora and their team for their popular consumer offering that has attracted a massive audience, and have been impressed by Pandora’s strategic progress and stronger execution,” said SiriusXM chief executive Jim Meyer.
“We believe there are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses.” The merger agreement includes a “go-shop” provision allowing Pandora to
seek a better offer from another party.
The companies said they expect to close the deal in early 2019 and that there would be no immediate change in listener offerings.
Roger Lynch, CEO of Pandora, said the combined firm would be “better positioned to take advantage of the huge opportunities we see in audio entertainment, including growing our advertising business and expanding our subscription offerings.”
Analyst Mark Mahaney of RBC Capital Markets said the tieup appeared to be a positive move that could help Pandora compete in streaming.
“We view this as a logical strategic step for Pandora,” Mahaney said in a note to clients.
“Synergies between its very strong in-home US presence and SiriusXM’s very strong in-car presence should be generatable over time.”
Pandora is one of the oldest online music operators and recently reported it had some six million paying subscribers, along with more than 70 million “active users.”
But it has been overtaken by Swedish-based Spotify, with 83 million paying subscribers worldwide and Apple, with more than 50 million.
SiriusXM charges users monthly subscription fees while Pandora offers free music streaming with advertisements or monthly ad-free paid subscriptions for $4.99 and $9.99.
Published: 26-09-2018 09:06