SiriusXM Acquires Minority Stake in SoundCloud for $75 Million

SiriusXM Studios on March 04, 2019 - Getty-H 2020
Noam Galai/Getty Images

The audio entertainment giant puts money into the open audio platform.

Audio entertainment giant SiriusXM Holdings said Tuesday it has invested $75 million in open audio platform SoundCloud in return for a minority stake of an undisclosed size and two board seats.

Last year, SiriusXM, controlled by John Malone's Liberty Media, closed its acquisition of music streaming service Pandora. 

SoundCloud said it would use the additional investment to "accelerate its product development and enhance the services that fuel its global community of creators and listeners."

The minority investment follows a successful advertising sales relationship between SoundCloud and Pandora that started last year. Under the relationship, advertisers and brands can purchase SoundCloud’s U.S. ad inventory directly through Pandora and use the company’s direct sales capabilities, targeting data and audio programmatic platform.

Together, SoundCloud and Pandora’s combined U.S. audience offering reaches more than 100 million unique listeners, creating the largest digital audio advertising marketplace, SiriusXM said Tuesday.

SoundCloud, which offers a free and an ad-free $9.99 a month service for listeners, as well as various service tiers for creators that cost $6 to $16 per month, said it set all-time highs for engagement, creators heard, subscribers and revenue in 2019. The company mentioned it for the first time reached a $200 million "forward revenue run-rate" in the fourth quarter. The improvements came after SoundCloud in 2017 faced an uncertain future before securing a $169.5 million round of funding from the likes of Raine Group and Singapore-based investment company Temasek, along with a new executive team.

"SoundCloud’s three consecutive years of strong financial performance directly reflect the success of our creator-led growth strategy,” said CEO Kerry Trainor. “We have an exciting road map focused on deepening the connections between creators and listeners that fuel creator discovery, career growth and the evolution of music culture on SoundCloud."

“SoundCloud’s unique platform serves a vital role in today’s music ecosystem where new artists are discovered and build their fan base, and established artists experiment and connect directly with their fans in highly effective ways,” said Jim Meyer, CEO of SiriusXM. "We admire SoundCloud’s loyal and growing audience, its offering for creators, and its reputation and popularity in global music communities. We believe this is another opportunity to continue creating value for SiriusXM stockholders by investing in expanding digital audio platforms."

The Raine Group served as financial adviser to SoundCloud, with Morrison & Foerster serving as its legal counsel. Allen & Co. served as financial advisor to SiriusXM, with Weil, Gotshal & Manges LLP being the legal counsel.