SiriusXM Announces Purchase of Pandora for $3.5 Billion

When most people think of music streaming they tend to think of Spotify, Apple music or Tidal. Despite flying below the radar Pandora has managed to sustain a certain amount of success with a respectable 70 million users.

However, while most people are letting Pandora go unnoticed SiriusXM is hoping that the streaming service can help them move into the future. In an article from CNN, the satellite company has announced a $3.5 Billion purchase that would make Sirius the “largest audio entertainment company in the world.”

The purchase is a big one for the satellite company. While SiriusXM already has 36 million subscribers, Pandora would help the company gain a foothold in the streaming industry.

SiriusXM CEO Jim Meyer said in a statement that “We believe there are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses,”

The move is not entirely unexpected. In July 2017, SiriusXM had already invested $480 million in the company and gained 19 percent of the stock in return. At the time reports circulated that SiriusXM intended to eventually buy the company.

Since SiriusXM’s investment in the company, Pandora has seen changes in the business side of the company, including the ousting of Pandora Co-founder Tim Westergren from his position as CEO and board member. On top of that the company president, Michael Herring was fired.

The good news was the company’s stock nearly doubled in value in anticipation of a purchase, despite losing $221 million in revenue in the first half of the year.

The challenges of monetizing music streaming are not new and other services, such as Spotify, have faced the same problem. This year the company hit 180 million users, but still reported net loss of $460 million.

Despite that streaming has only grown more popular in recent years and has taken over the music industry. In a recent mid-year report from the Recording Industry Association of America, streaming now makes up 75 percent of the industry’s revenue.

With the landscape of music changing SiriusXM’s purchase makes perfect sense if they hope to compete with the likes of Spotify and Apple.