In the realm of music, cassette tapes are largely dead and compact discs (CDs) are not far behind. Streaming music is both the present and future, and there are big bucks at stake. Hence why satellite music giant SiriusXM today announced that it is acquiring Pandora for around $3.5 billion. Once closed, the all-stock transaction will create the world's largest audio entertainment company, 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," SiriusXM CEO Jim Meyer said in a statement.
SiriusXM already boasts 36 million subscribers across North America, and over 23 million annual trial listeners. Combined with Pandora's 70 million monthly active users, including 5.6 million paying subscribers, SiriusXM can claim the largest digital audio audience in the US, once the transaction is complete.
The two audio giants had already been linked before this agreement. Last year, Pandora received a $480 million cash infusion from SiriusXM as part of a strategic partnership. SiriusXM saw it as an opportunity to create value for its shareholders, while Pandora aimed to "grow and execute" its business plan in hopes of better competing with the likes of Apple Music and Spotify.
"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," Pandora CEO Roger Lynch said in statement.
Pandora will continue to exist as its own separate brand and service, with "no immediate change in listener offerings." That said, SiriusXM is planning to leverage Pandora to extend its own brand presence beyond vehicles and into the home and mobile. The company also said there will be "unique audio packages" resulting from this transaction, but did not elaborate on what those will entail.