SiriusXM and Pandora: Perfect Together
SiriusXM has been on a very strong trajectory when it comes to subscribers. The number of subs directly correlates to their bottom line. However, as of late, the number of subs has been slowing down. This can be attributed to fewer new vehicle sales, and the younger generation not opting for the service - especially those who are constantly tethered to their iPhones. To hedge against potentially dwindling satellite radio service customers (as online mobile services such as Spotify continue to grow), the company purchased Pandora to hedge against losing subscribers. Moreover, the two services plan to combine their core competencies to offer something to customers that has not been heard of before. Imagine curated content with DJs when you want it, or personally curated content available on the fly for your next road trip.
The deal breaks down like this: SiriusXM will make a $480 million strategic cash investment in Pandora. Through this agreement, SiriusXM gains control of the leading U.S. provider of ad-supported digital radio. Pandora has a loyal audience of nearly 100 million listeners in the U.S. Pandora is the leading player in the burgeoning digital audio advertising market in the U.S., but Spotify numbers trump Pandora’s worldwide. This helps complement SiriusXM, where the signal is only available in North America. The capital provided through the SiriusXM investment will allow Pandora to make targeted investments and capitalize on opportunities to build on its position in the streaming radio business in our market.