Two giants in the in-vehicle audio industry are about to merge forming the largest single supplier of tunes to our cars.
Sirius XM has just purchased Pandora in an all-stock deal that is valued at $3.5 billion. This new combined entity will have a market value of about $30 Billion, rivaling Spotify’s market value. The Wall Street Journal says that the new move by SiriusXM will help the company go beyond cars. “This transaction is all about creating growth opportunities together that are not available to the separate companies,” Sirius XM Chief Executive Jim Meyer to WSJ. While we are sure that’s true, we find the in-vehicle angle interesting as car buffs.
Audio options have never been greater for drivers. The options now include HD terrestrial AM and FM radio, digital audio via CD players,, MP3 audio played via Bluetooth from one’s device or connected with a USB cord, subscription SiriusXM audio with hundreds of channel options, and streaming music services from the leaders, Apple, Spotify, Pandora and also from many other smaller apps. We’re sure we left a few out, but these cover the most commonly used options.
More and more, drivers are migrating away from CD players and AM/FM and moving towards audio provided in some way by smartphones. So much so that some automakers are starting to delete terrestrial radios and CD players. SiriusXM presently has 33 million subscribers, and that number has steadily climbed. The company added a third of a million subscribers just last quarter. But will consumers opt to keep paying for SiriusXM long-term on top of the streaming music services they already have on their phones? With this new merger, SiriusXM doesn’t have to worry as much about that question.
In a press release issued by SiriusXM, the company states that the current products and services offered by both Pandor and SiriusXM will continue. The company says that benefits to the deal include the opportunity for the companies to capitalize on cross-promotion opportunities between SiriusXM’s base of more than 36 million subscribers across North America and Pandora’s more than 70 million monthly active users, which combined represents the largest digital audio audience in the U.S. New options are also envisions. SiriusXM envisions “leveraging its exclusive content and programming with Pandora’s ad-supported and subscription tiers to create unique audio packages, while also utilizing SiriusXM’s extensive automotive relationships to drive Pandora’s in-car distribution.”
Both SiriusXM and Pandora have one big thing in common. Both provide subscribers with commercial-free content and almost limitless choices that listeners can customize or pre-set on their devices. Subjectively, the pairing of the most modern “radio” format with a top player in streaming music seems to put SiriusXM/Pandora in a good position to fend off Apple Music and Spotify. Statista ranks Apple Music and Spotify ahead of Pandora in reach, but Pandora is neck and neck with Spotify in terms of average active sessions.
The purchase of Pandora by SiriusXM has been approved by both companies’ boards of directors and expected to close by the first quarter of 2019 pending regulatory approval.
Charts courtesy of Statista.
