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Pandora boss plays down reports his firm is up for sale

By Chris Cooke | Published on Friday 12 February 2016

Pandora boss Brian McAndrews played down reports that the streaming music firm is up for sale on an investor call yesterday, when asked to comment on a New York Times report that said the company had engaged Morgan Stanley to sound out potential buyers.

The paper’s sources conceded that “talks are preliminary and may not lead to a deal”, while McAndrews, after initially declining to comment on the speculation, told analysts, according to the Financial Times, “it’s just not something we are focused on. We are focused on working as an independent company and driving our business. We are a public company and all that that entails”.

Like most other free-to-access streaming services, Pandora is faced with the tricky challenge of turning impressive user numbers into equally impressive revenues.

Though Pandora is feeling more pressure than most, partly because it is publicly listed and so is very much in the glare of Wall Street, and partly because its user-growth has slowed of late (and at one point user-numbers dipped), meaning it can’t placate investors with the “yeah, we’re losing money but look at all those lovely new users!!!!” line.

While it continues to try to further grow its current core revenue team – ad sales – Pandora’s main strategy at the moment is to try to find other sources of income, mainly by moving into on-demand streaming to make its premium offer more compelling, while also having a go at ticketing, hoping that its platform’s reach and data will be attractive to concert promoters.

Meanwhile, expansion beyond the US, Australia and New Zealand is back on the agenda, which poses licensing challenges (and costs), though would probably result in a new period of userbase growth, allowing that “yeah, we’re losing money but look at all those lovely new users!!!!” line to be wheeled out once again.

Nevertheless, despite this diversification strategy, and some key acquisitions to help make it all happen, investors remain hesitant about Pandora’s future, a fact seen in its share price, which has slumped of late, so that the company’s market cap valuation now stands around $2 billion, compared with over $7 billion two years ago.

It may be that Pandora management secretly reckon that diversification would be easier if the firm was in private ownership, and even more so if it was part of a bigger entity, like a Facebook or a Google, or maybe part of Sirius XM, or even Live Nation, all of whom analysts have reportedly tipped as possible bidders.

Though, for the time being, McAndrews seems set on making Pandora pay as an “independent company”. Officially speaking at least.