Monday, February 15, 2016

Despite Reports, Don’t Look For Pandora To Be Acquired Anytime Soon

Pandora for sale? imageIs Pandora really up for sale? If it is the timing is extremely curious.

Pandora was said to have begun talks with Morgan Stanley to help it find a buyer, according to an initial article by the New York Times, although the talks were deemed preliminary and had no guarantee of a deal. If you look deeper into the company’s pros and cons, a sale looks a lot more fantasy than reality though, at least in the near future. 

While much of the press has focused on the financial part of a possible sale, let’s look at what may be some of the more intriguing aspects of a possible sale.

Where’s the match? 
There are only a handful of deep-pocket companies that might take a even cursory glance at a Pandora acquisition, but most are not a good fit. For instance, Google’s name is frequently mentioned as a possible Pandora suitor, mostly because of the synergy with it’s ad network, since most of Pandora’s revenue comes from ads. That said, there’s really nothing about Pandora that Google doesn’t either already have, or can’t get for less money.

Apple is another that doesn’t need what Pandora has to offer. It already has the same infrastructure for its iTunes Radio, and chances are that most of Pandora’s subscribers are already iTunes users. There’s not much that Apple would find attractive.

iHeart Media could probably find a space for Pandora among its current online radio properties, but the company reportedly has a huge amount of debt and would find it tough to swing a sale that would probably cost it around $2 billion.

Some think that Samsung might be a fit based on the company’s need to keep up with Apple in the smartphone market. The problem is that it already has a similar service in its Milk Music which hasn’t gotten any traction in the U.S. Pandora could instantly give it that traction, but to what end? Does the addition of an on-board music app make that much of a difference to the average smartphone buyer? In a word, no. Samsung would be better off pouring that $2 billion or so into R&D than adding a music app that could be obsolete in the blink of an eye.

Then there’s Amazon. I’ve been predicting for the last year that Amazon would be the next deep-pocket company to enter the streaming music market in a big way, as it’s basically there already with its Amazon Prime Music service for its Amazon Prime members. Reports have recently surfaced that the company is getting ready to introduce a mainstream streaming service not tied to Amazon Prime, and Pandora could actually be a useful addition if that were the case.

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