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SiriusXM’s $3.5 billion purchase of Pandora just might be music to our ears

In an era dominated by streaming services, SiriusXM is still managing to thrive, but the satellite radio company is aware that the vast majority of its customers listen in the car. In 2017, SiriusXM began looking to move beyond the automobile, buying a 16-percent stake in streaming service Pandora for $480 million. Now the company is looking to bite off a much bigger piece, as it has moved to acquire Pandora in a $3.5 billion all-stock deal.

While Pandora is currently lagging behind major competitors like Spotify and Apple Music, this deal could give the service the resources to go after exclusive deals with artists, which Apple Music and Tidal have used to gain subscribers in the past. SiriusXM already makes use of this type of deal as well, as its exclusive rights to Howard Stern’s programming show.

If this deal goes through, it would make SiriusXM the world’s largest audio entertainment company, with more than $7 billion combined revenue estimated in 2018. The deal would combine SiriusXM’s 36 million subscribers and Pandora’s 70 million monthly active users, giving the company a wide base of customers. If the company decided to offer package deals, it could begin to combine those separate customer bases into one larger pool.

This deal may not even happen, however. While SiriusXM expects the deal to close in the first quarter of 2019, the deal does include a “go-shop” provision. This allows Pandora to “actively solicit, receive, evaluate, and potentially enter negotiations with parties that offer alternative proposals following the execution date of the definitive agreement,” so it’s possible that another company could swoop in with a better deal.

“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,” SiriusXM CEO Jim Meyer said in the press release announcing the acquisition. “We believe there are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses. 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.”

No matter what, this could be a big win for Pandora. The service has been on an upswing as of late, offering new features like personalized playlist The Drop, which allows it to better compete directly with Spotify. Adding the resources of a larger company may be just what the service needs to turn the “big two” streaming services — Spotify and Apple Music — into a “big three.”

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Kris Wouk
Former Digital Trends Contributor
Kris Wouk is a tech writer, gadget reviewer, blogger, and whatever it's called when someone makes videos for the web. In his…
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