Why Bob Pittman Was Right


For years, and as far back as 2011, when Pandora was the shiny new toy for consumers, iHeartmedia CEO Bob Pittman was saying the Internet pure-play company was not a sustainable business model on its own. Pittman said Pandora was more like AOL’s Instant Messenger, a feature to be offered by a larger company. Monday morning, Sirius XM announced it was buying Pandora for $3.5 billion.

Pandora has never been able to consistently make a profit and some might argue that Spotify has become the more popular streaming app for consumers.

SiriusXM had already owned 30% of Pandora. The terms of this deal allow Pandora to pursue an alternative buyer for a higher price, which is typical in the mergers-and-acquisitions business.

The transaction has been unanimously approved by both the independent directors of Pandora and by the board of directors of SiriusXM. The transaction is expected to close in the first quarter of 2019. It is subject to approval by Pandora stockholders, expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and certain competition laws of foreign jurisdictions, and other customary closing conditions.

Jim Meyer, Chief Executive Officer of SiriusXM, said, “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. We believe there are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses. The addition of Pandora diversifies SiriusXM’s revenue streams with the U.S.’s largest ad-supported audio offering, broadens our technical capabilities, and represents an exciting next step in our efforts to expand our reach out of the car even further. Through targeted investments, we see significant opportunities to drive innovation that will accelerate growth beyond what would be available to the separate companies, and does so in a way that also benefits consumers, artists, and the broader content communities. 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.”

Roger Lynch, Chief Executive Officer of Pandora, said, “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, including growing our advertising business and expanding our subscription offerings. The powerful combination of SiriusXM’s content, position in the car, and premium subscription 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 and will allow them to participate in upside, given SiriusXM’s strong brand, financial resources and track record delivering results.”

The owners of the outstanding shares in Pandora that SiriusXM does not currently own will receive a fixed exchange ratio of 1.44 newly issued SiriusXM shares for each share of Pandora they hold. Based on the 30-day volume-weighted average price of $7.04 per share of SiriusXM common stock, the implied price of Pandora common stock is $10.14 per share, representing a premium of 13.8% over a 30-day volume-weighted average price. The transaction is expected to be tax-free to Pandora stockholders. SiriusXM currently owns convertible preferred stock in Pandora that represents a stake of approximately 15% on an as-converted basis.


  1. Yes, certainly if anyone would know about an “unsustainable business model”, it’s Bob Pittman. AOL anyone? Lol. And at least bankruptcy is keeping iHeart sustainable.

  2. Bob figured out it was unsustainable? Considering Pandora is basically the same product as radio with just a different distribution medium, that says a lot about the current state of the radio industry. Thanks for confirming was so many all ready know…..

    • Coming from the guy who will have $10B in debt to work off AFTER emerging from bankruptcy. Not to mention Liberty Media, majority shareholder of Sirius XM, put down a $1.1B offer for 40% of iHeart earlier this year which was eventually turned down before Chapter 11. They have been gobbling up iHeart debt ever since with their eye still on the prize. At the right price. That guy usually gets what he wants. And now that will be iHeart.

  3. I’m having a hard time, as a listener, figuring out how SiriusXM + Pandora works. I suppose in the medium term, it’s all going to apps, and if that’s the case they’re just two apps from one owner, and that’s it.

    If Pandora goes all-subscription, like SiriusXM, that would be bad. But hey, maybe it would make sense revenue-wise. And maybe SiriusXM can find a way for listeners to expand the company’s music radio “dial” with “stations” they create on Pandora. That will especially make sense if SiriusXM thinks of itself as a subscription radio company and not as a satellite radio company. Which maybe it already does.

    But what happens after Apple and/or Google move us past the apps model? What’s our “radio” then?


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