Over the last few years the number of music streaming services has grown quickly, with major players like Amazon, Apple, and Google getting into the business, along with many smaller rivals led by Pandora and Spotify. Now Sirius XM satellite radio wants to enter by buying Pandora. The move could imply that music services need to scale up to stay competitive. Could this be the beginning of a consolidation phase in the industry? Allison Prang reports for The Wall Street Journal:
Subscription radio company Sirius XM Holdings Inc. SIRI -0.43% agreed to buy Pandora Media Inc. P -3.19% in a deal valued at about $3.5 billion, as the two sides face increasing competition from Spotify Technology SA and Apple Inc.
Sirius XM last year invested $480 million in Pandora, which now represents a stake of about 15% in the music-streaming company. John Malone’s Liberty Media Corp. owns a controlling interest in Sirius XM.
Music-streaming services have been growing in recent years, and U.S. consumer spending in that area is expected to jump 29% to $6.6 billion this year, said the Consumer Technology Association, an industry group.
Spotify is the global leader, with 83 million paying subscribers as of June, but Apple Music has been catching up to Spotify in the U.S.
Pandora has the largest audio music-streaming service in the U.S. with 74.7 million active listeners to its free, ad-supported personalized music stations. The company has struggled, though, as users and ad dollars have migrated to services that allow listeners to play individual songs on demand.
Sirius XM, which has a base of more than 36 million subscribers, said the deal would allow it to create audio packages that would pair its exclusive content and programming with Pandora’s ad-supported and subscription tiers.
Read more here.
Jeremy Jones, CFA
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