Pandora has agreed to be acquired by satellite company SiriusXM for $3.5 billion. The deal will expand SiriusXM’s reach. The satellite company has 36 million subscribers, while Pandora has more than 70 million monthly active users.
The companies say users shouldn’t expect any immediate changes, Pandora will continue to operate as a separate service.
Pandora has amassed a massive audience, but the company has struggled financially due to long-running fights with music labels over music licensing rates. Recently it has lost ground to rivals Spotify and Apple Music, and last year it launched a Spotify-like premium on-demand service. The company has been looking for a buyer for a couple of years.
A big idea behind the merger is that SiriusXM and Pandora target complementary audiences. SiriusXM is primarily used as a premium in-car audio service, while Pandora is mostly used for streaming music to homes and on mobile devices. By combining forces, the two companies hope to become stronger in both arenas.
SiriusXM plans to utilize “SiriusXM’s extensive automotive relationships to drive Pandora’s in-car distribution.” We can expect Pandora to try to upsell some of its own users on signing up for SiriusXM subscriptions, and Sirius may also draw on Pandora’s software expertise to help it improve its own services.
The all-stock deal is expected to close in early 2019.