Satellite radio giant SiriusXM has made a $3.5-billion deal to absorb music-streaming service Pandora. The agreement was made public Monday morning as officials at Sirius predict the merger will pull in US$7 billion revenue in 2018.
Combined, Sirius and Pandora will be the world’s largest audio entertainment company, with hopes for a long-term partnership and many future growth opportunities.
The official press release shared the details of the all-stock transaction. The deal valued Pandora at $10.14 a share, which is a 12 per cent increase since their previous estimate.
SiriusXM already held a 15 per cent stake after investing more than $450 million into the struggling company last year.
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Together, the multimedia monopoly now aims to dominate the industry and compete with other mainstream services like Spotify and Apple Music.
Pandora receives an influx of more than 70 million users monthly, which is almost double SiriusXM’s subscriber count, which sits at around 36 million.
Their expansion with Sirius will allow for higher accessibility, with a much greater method of distribution. The radio service will now be incorporated heavily on mobile, just as Pandora will become an additional in-car service.
This will ultimately result in higher subscription numbers for both services.
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Pandora’s CEO Roger Lynch stated:
“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. The powerful combination of SiriusXM’s content, position [and] products, along with the biggest audio streaming service in the U.S., will create the world’s largest audio entertainment company. This transaction will deliver significant value to our stockholders.”
Before its explosion among the streaming moguls, Pandora began as an online radio service in 2000. Although very similar to SiriusXM, it was not as successful until it launched its own premium services.
After a lengthy lawsuit which sledgehammered their numbers, Pandora struggled to establish its service. It continuously fell short of other major companies, like Amazon, Spotify and Apple Music. However, SiriusXM’s CEO, Jim Meyer, saw the worth in their business and execution, which had a hand in their partnership.
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Meyer shared his excitement on the 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. 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.”
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SiriusXM and Pandora approved the deal which is expected to be made by the first quarter of 2019.
Subscribers have been told that they shouldn’t expect any change in services, at least for now.
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