Liberty Media’s SiriusXM and Pandora are higher off collectively, even when the pending acquisition would not change its structural disadvantages when in comparison with rivals Spotify and Apple, a number one Wall Street analyst has steered.
BTIG Research analyst Brandon Ross, who wrote two years in the past {that a} SiriusXM-Pandora merger was inevitable, said on Tuesday that as streaming companies proceed to develop in reputation, and enhance their viability in Sirius’ core space — the automotive — the corporate might want to “actually embrace digital” and, for starters, use Pandora as a subscriber funnel to its free trial ecosystem.
Ross states that he “by no means believed” in a standalone Pandora however that it holds nice potential worth as a wing man of kinds for its new proprietor, on condition that it has “an engaged viewers on cellular which could possibly be helpful in driving energetic customers to a different enterprise,” and whereas “it has tried and failed at ticketing up to now and introduced in subscription streaming… in our view, upselling into Sirius subscriptions is a greater endgame given [SiriusXM’s] economics.”
On the flip facet, Ross sees SiriusXM as being useful in leveraging its relationships within the auto sphere to develop and simplify the Pandora automotive expertise. He additionally expects SiriusXM to assist Pandora increase its spoken-word choices by sharing content material licenses, “hopefully giving Pandora a preventing likelihood at taking free radio share within the automotive and bettering its value construction.”
Ross additionally states that if Pandora finally decides to proceed with its subscription streaming tier, “it may naturally be bundled with SiriusXM subscriptions.”
More importantly, Ross notes, is that SiriusXM’s all-stock acquisition of Pandora means it holds an abundance of money that could possibly be used for extra ROI generative investments, and that Live Nation (34% owned by Liberty) would make a really perfect match. “We consider Liberty President and CEO, Greg Maffei, wishes to not solely collapse the [SiriusXM] share construction and take management of [SiriusXM]’s money movement but additionally to mix Sirius and Live Nation right into a single music distribution firm. We consider a Sirius/LN deal will come sooner reasonably than later.”
As for potential synergies between the 2 firms, Ross says Pandora may leverage its model relationship to promote promoting and sponsorships. The digital radio service’s trove of person knowledge would additionally maintain large advantages for LN’s stay enterprise. “Live Nation may use this knowledge to assist plan and promote/market excursions,” Ross says. “Meanwhile, Spotify is utilizing its knowledge as a chip in label negotiations and expects it to unlock vital margin alternatives. Could Pandora and Live Nation do the identical within the U.S.? Other alternatives embody an owned platform for Live Nation to additional its media/video ambitions, and the flexibility to supply artists a spot to advertise their music.”
