Pandora and Live Nation ‘brought together’ by SiriusXM deal

SiriusXM has created the “world’s largest audio entertainment company” by acquiring internet radio/streaming service Pandora Media, the US satellite radio giant said today, in news that is likely to reignite speculation about a potential merger with Live Nation.

The acquisition – an all-stock deal worth US$3.5bn – will “capitalise on cross-promotion opportunities between SiriusXM’s base of more than 36m subscribers across North America and 23m-plus annual trial listeners and Pandora’s more than 70m monthly active users” – the largest digital audio audience in the US, according to a joint statement.  The new company expects to turn over more than $7bn in 2018, with “strong, long-term growth opportunities” predicted for the years ahead.

SiriusXM originally invested $480m in loss-making Pandora last June, concurrent with the company offloading Ticketfly to Eventbrite in a return to its “core priorities”.

Commenting on the merger, Jim Meyer, CEO of SiriusXM, says: “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.

“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 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.”

SiriusXM – 71% owned by Liberty Media Corporation – has long been the subject of rumours it could take over, or merge with, Live Nation, in which Liberty holds a 34% stake. Greg Maffei, CEO of Liberty Media, said in said in May that the company may look at “ways to have them [SiriusXM and Live Nation] work together”, and many analysts espoused the potential benefits of a Live Nation/Ticketmaster–SiriusXM merger, which Citigroup’s Jason Bazinet says would create a “vertically integrated music titan”.

Brandon Ross, of BTIG Research – who said as long ago as June 2016 that Live Nation, SiriusXM and Pandora “could act as a powerful end-to-end music distribution platform from live music to streaming music and radio” – suggested in July that an acquisition of Live Nation by SiriusXM in on the cards. SiriusXM’s CFO, David Grear, however, soon poured cold water on the rumours, saying he’s “not certain they have much to do with reality”.

“This could be anti-competitive in the concert industry – or not”

In an investor call yesterday, Ross was again banging the drum for a SiriusXM–Live Nation merger, asking Meyer (pictured) whether “Live Nation together with these assets [SiriusXM and Pandora] makes more sense than what one carries just as a standalone company”, although the CEO declined to comment.

Speaking to Slate, David Lowery, a music business lecturer at the University of Georgia, says he also sees deeper integration for the three brands in future, with today’s deal “effectively bring[ing] these three companies together”.

Lowery – also the founder of alt-rock bands Camper Van Beethoven and Cracker – adds that only time will tell if the acquisition has a significant impact on the live music business. “This could be anti-competitive in the concert industry – or not,” he comments. “For instance, my bands enjoy significant SiriusXM play. Cross-promotion could enhance revenues of many mid-tier artists. But honestly that’s an unknown.”

Following news of the acquisition, Pandora’s shares jumped 8.6% to $9.88, although they have since fallen to $8.98.

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