Sirius invests big in Pandora
SATELLITE radio network SiriusXM said on Friday it will invest $480 million in internet radio leader Pandora, forging a union between two companies that have operated on parallel tracks.
The move comes amid rapid changes in the music business as Pandora, which has seen its model lose ground to ondemand online platforms such as Spotify, last month appealed for buyers.
Pandora separately announced that it was selling Ticketfly, a ticketing company popular with independent rock venues, for $200 million to event management site Eventbrite.
The sale marks a significant loss as Pandora bought Ticketfly less than two years ago for $450 million, seeing it as a new way to broaden its reach, although Pandora said it still had plans in ticketing through future collaboration with Eventbrite.
SiriusXM, whose core base of older listeners in cars has driven healthy profits but has little presence on smartphones, said it will pump $480 million into Pandora and take three seats on its board, including chairman.
Jim Meyer, the chief executive officer of SiriusXM, said his company was upbeat about Pandora’s recent direction, which has included starting a premium on-demand service.
“This strategic investment in Pandora represents a unique opportunity for SiriusXM to create value for its stockholders by investing in the leader in the ad-supported digital radio business, a space where SiriusXM does not play today,” he said in a statement.
The market’s reaction was sharply split. Pandora Media Inc share prices jumped 1.2 percent, down from early highs, while SiriusXM Holdings Inc tumbled 3.7 percent – a sign that investors saw more advantage in the deal for Pandora.
Pandora’s founder and CEO Tim Westergren voiced confidence that the deal marked a turning point, saying in a statement: “The investment from SiriusXM infuses resources to help Pandora continue to grow and innovate.”
As part of the deal, Pandora scrapped a separate agreement last month under which private equity group KKR planned to inject $150 million. Pan- dora said it would pay the firm $22.5 million as a termination fee.
With the investment, SiriusXM will take a 16 percent stake in Pandora, after including the newly issued preferred stock.
SiriusXM agreed not to make further acquisitions in Pandora for 18 months and never to go beyond a 31.5 percent stake so long as the agreement is in force.
Pandora – best known for internetgenerated radio “stations” based on users’ likes – had some 76.7 million active listeners as of last month.