Pandora to be acquired by Sirius XM in $3.5b deal, will be “creating world’s largest audio entertainment company”

Subscription radio company Sirius XM Holdings is buying online radio and music streaming service Pandora in an all-stocks deal that the companies estimate at about US$3.5 billion.

The result, when it goes through in the first quarter of 2019, will be “creating world’s largest audio entertainment company”, they said in a joint statement.

See the media release HERE.

SiriusXM’s base of over 36 million subscribers across North America and 23 million+ annual trial listeners.

Pandora has 70 million monthly active users, and its subscription member tally was six million at the end of the 2018 second quarter.

Shares of Sirius rose 0.1% pre-market while shares of Pandora climbed 11%.

The two companies will run independently and nothing will change “for the time being”.

Sirius XM, owned by billionaire John Malone, bought 15% of the Oakland, California-based streaming service last year, for $480 million.

This threw Pandora a lifeline as it saw streaming music subscribers shift their allegiance to Spotify and Apple Music.

Last year it brought in CEO Roger Lynch from Sling TV to turn its fortunes around and launched its own on-demand music service.

Most recently, Pandora introduced the ability to share music with Spotify, and last week a new personalised playlist called The Drop which finds new music for premium $10-a-month subscribers based on their past listening

The move will see Sirius XM move beyond its current customers which tune in mostly when they’re driving, to the home and mobile devices, and open the door to setting up its own tap into the music streaming phenomenon.

Jim Meyer, chief executive officer of SiriusXM, said: “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.

“We believe there are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses.”

Meyer said the benefits would primarily be two-fold.

“The addition of Pandora diversifies SiriusXM’s revenue streams with the US’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.

“Through targeted investments, we see significant opportunities to drive innovation that will accelerate growth beyond what would be available to the separate companies, and does so in a way that also benefits consumers, artists, and the broader content communities.

“Together, we will deliver even more of the best content on radio to our passionate and loyal listeners, and attract new listeners, across our two platforms.”

Pandora’s Lynch added, “We’ve made tremendous progress in our efforts to lead in digital audio.

“Together with SiriusXM, we’re even better positioned to take advantage of the huge opportunities we see in audio entertainment, including growing our advertising business and expanding our subscription offerings.

“The powerful combination of SiriusXM’s content, position in the car, and premium subscription products, along with the biggest audio streaming service in the U.S., will create the world’s largest audio entertainment company.

“This transaction will deliver significant value to our stockholders and will allow them to participate in upside, given SiriusXM’s strong brand, financial resources and track record delivering results.”