FYI.

This story is over 5 years old.

Pandora Reportedly Considering Putting Itself Up For Sale

The music streaming company reportedly hired Morgan Stanley to help shop itself around as revenue falls.
February 12, 2016, 9:03pm
Image courtesy of the company

Pandora, the music streaming radio service, may be putting itself up for sale, the New York Times has reported.

Quoting unnamed sources familiar with the company, the Times reported that Pandora hired financial services corporation, Morgan Stanley, to help it meet with possible buyers. This follows a troubled 2015 financial year, which netted a loss just shy of $170 millionfor the company. The talks are preliminary for now and do not guarantee a deal.

Advertisement

Pandora currently has around 200 million registered users, of which less than half (around 81 million) are monthly users, and only 3 million (just over 1%) are paid users. According to the Times, the online radio company currently has the most users of any streaming service.

Pandora's woes have stemmed primarily from excessive spending in a bid to diversify its company and broaden its content. Last year, Pandora acquired its biggest rival Rdio for $75 million, as well as the event promotor Ticketfly for $450 million. In addition to the dent made by those sales, Bloomberg News reported, the overall cost for song rights gobbled 52 percent of Pandora's revenue, or $610 million. This included $111.6 million in stock payout to departing employees, and nearly $90 million to settle a royalty dispute with the Record Industry Association of America (RIAA) over use of recordings made before 1972. In addition to that, Pandora pays out over 3 million annually to artists such Drake and Lil' Wayne for use of their music.

Pandora has also had to pay both Google and Apple taxes on sub licensing agreements, dishing out $42.6 million in payments to the two tech companies last year alone. Apple has also emerged, along with Spotify, to become one of its biggest competitors. Amazon is also said to be launching it's own streaming service later this fall. Both the Times and Bloomberg News have speculated that Pandora may not be able to keep up with the growing competition.

While the field of potential buyers includes all the above streaming services, Mark Suster, an Upfront Ventures managing partner, told Bloomberg News in a video interview that Apple is the best positioned to benefit most from purchasing the company: "Apple's made a lot of moves to get into streaming services," he said. "Their music service is terrible. It's currently among the worst out there. Apple is so desperate to sell a subscription, that I think they are alienating a lot of iTunes users who traditionally just downloaded music."

Still, the company shows no signs of flagging its commitment to be a premiere streaming service. Just today, it was announced that Pandora was premiering the stream of Kanye West's The Life of Pablo, which made its debut at a listening party hosted by the rapper in Madison Square Garden. And the company is for the first time the official streaming partner of SXSW—and will be the host for the Discovery Den venue with four days of line-ups announced. "The Pandora Discovery Den at SXSW station will give listeners a taste of the hottest artists to watch in 2016," said Pandora through a press release announcement, "with cross-genre mixtapes showcasing the featured performers, and exclusive access to four full days of livestreamed shows and behind-the-scenes interviews during the festival."

Pandora did not respond to THUMP's request for comment.