SiriusXM buys Pandora for $3.5 billion

Originally posted Monday, September 24, 2018 by RODNEY HO/rho@ajc.com on his AJC Radio & TV Talk blog

Two services that took major bites out of traditional AM/FM radio are joining forces: satellite service SiriusXM is buying streaming service Pandora for $3.5 billion.

SiriusXM has built up about 36 million paying North American customers. Pandora, with about 70 million active users, relies more heavily on advertising to survive and has largely lost money during its run going back to 2000.

Pandora’s concept built a following in the mid-2000s by curating music “stations” to people’s tastes. They could start with a single song, artist or genre and adjust the station over time by giving a song “thumbs up” or “thumbs down” or to simply skip it. Songs were categorized by experts.

Unfortunately, Pandora was slow to pick up on what Spotify offered: on-demand music for a monthly fee. Spotify now has about 20 million paying subscribers in the U.S. and Apple Music has about the same. Pandora has been on the block for a couple of years.

Sirius competed with XM at first for customers willing to pay a subscription to get ad-free music channels, sports and entertainment, especially Howard Stern. Stern, freed from the strictures of commercial radio, helped bring in millions of subscribers.

Sirius and XM combined in 2008 and have managed to survive and even become profitable in the face of changing listening patterns. SiriusXM last year purchased 19 percent of Pandora, injecting $480 million in funding. Now it’s willing to just take over completely.

SiriusXM, which is controlled by Liberty Media (which owns the Atlanta Braves, too) wants to provide an outlet for the tens of millions of people unwilling to pay for any service at all and are willing to tolerate ads for the benefit.

It's too early to assess what impact this move will have on California-based Pandora's presence in Atlanta, where it's been adding employees. (I'm checking with Pandora to get an exact number of employees they have locally. Nationally, they have more than 2,000.) The company offices in Atlanta are at Atlantic Station.

According to a story last month, Pandora signed a lease for what will become a base for hundreds of employees in the 21-story Campanile tower, according to building owner Dewberry Group. That’s the old BellSouth headquarters along Peachtree Street.

The company has 46 job openings in Atlanta on its website.

Standard Media, in light of the news, released ad revenue growth trends:

The latest Share of Ear® data from Edison Research shows a SiriusXM-Pandora combination would receive about 12 percent of all audio listening for people 13 years old and up. The average person listens to some sort of audio four hours a day.

I’ve been following both services for a long time.

In 2002, Sirius came to Atlanta and showed off its service to me for the first time. In 2007, I wrote a piece about Pandora when it was the hot new kid on the block.