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SiriusXM CEO Jim Meyer has big plans for the now-largest audio entertainment company in the world.
The satellite radio giant closed its $3.5 billion acquisition of music streaming service Pandora Music on Feb. 1, adding to the former’s 34 million subscribers the 68.8 million-plus active users of the latter (including about 6.8 million paying Pandora Plus and Pandora Premium subscribers).
The company forecasts that cost synergies will exceed $50 million per year by the end of 2020, “but this merger has never been about cost synergies,” Meyer said on a Jan. 30 earnings call.
Rather, the CEO pointed to the increased scale as conferring such key benefits as reaching “vastly more” users beyond SiriusXM’s traditional car-bound base — Buckingham Research Group analyst Matthew Harrigan says the merger adds “a further premium subscriber acquisition funnel.” Another opportunity lies in converting more of SiriusXM’s 23 million annual trials into subscriptions or Pandora advertising revenue.
The biggest challenge will be Pandora’s ongoing decline in users, down more than 12 million since late 2016, and listener hours, which dropped from 5.4 billion to 4.8 billion over the same span. “The biggest opportunity for change here is through improved content and marketing,” said Meyer, calling the launch of Pandora’s slate of podcasts “a great first step.”
Plus “the cross-collaborative opportunities are abundant,” says Macquarie Capital analyst Amy Yong. For example, Pandora listeners get a discounted $5 monthly satellite radio package, while SiriusXM subscribers can access a 14-day Pandora Premium trial.
“By midyear, we expect to deliver a new Pandora-powered channel to our SiriusXM app users based upon their favorite artist and a new radio channel, driven by the latest trend from Pandora’s billions of thumbs,” said Meyer, adding that with about half the owners of SiriusXM-enabled vehicles having used Pandora in the past two years, usage data also “should help us refine our marketing efforts.”
While the company must now deliver on the promises of integration, Wall Street is taking note of the opportunities, as Meyer touted his expanded platform’s potential benefits to content and advertising partners: “Our combination with Pandora completely changes the game.”
This story also appears in the Feb. 6 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
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