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SiriusXM and Pandora, Liberty Media, are better off, although the pending acquisition does not change its structural disadvantages compared to their rivals Spotify and Apple, suggested a Wall Street analyst.
BTIG Research Analyst Brandon Ross, who wrote two years ago that a merger between SiriusXM and Pandora was inevitable, said Tuesday that the popularity of streaming services continued to increase and strengthen their viability in Sirius' core business – the car -. embrace the digital "and, to start, use Pandora as a subscriber funnel to its free trial ecosystem.
Ross states that he "never believed" in an autonomous Pandora, but that he possesses great potential value as a man of the wing for his new owner, since he has "an engaged mobile audience that could be helpful in driving active users to another business," and while "he has tried and failed at ticketing in the past and has introduced broadcast in continuous subscription … in our opinion, the sale in Sirius subscriptions is a better end of part given [SiriusXM’s] economy."
On the other hand, Ross considers SiriusXM to be useful in leveraging its automotive relationships to extend and simplify the Pandora automotive experience. He also hopes that SiriusXM will help Pandora increase its spoken product offerings by sharing content licenses, "hoping to give Pandora a chance to take free radio shares in the car and improve its cost structure."
Ross also states that if Pandora finally decides to continue with his streaming subscription level, "this could of course be associated with SiriusXM subscriptions."
More importantly, notes Ross, SiriusXM's acquisition of Pandora means that it has plenty of cash that could be used for more ROI-generating investments, and that Live Nation (owned 34% by Liberty) would be the solution. ideal. "We believe that Liberty President and CEO Greg Maffei not only wants [SiriusXM] share the structure and take control of [SiriusXM]cash, but also to combine Sirius and Live Nation into a single music distribution company. We believe that a Sirius / LN agreement will come as soon as possible. "
With respect to the potential synergies between the two companies, Ross says Pandora could leverage its brand relationship to sell advertising and sponsorships. The data treasure of the digital radio service user would also be very beneficial to LN's live activities. "Live Nation could use this data to plan and promote / organize tours," says Ross. "At the same time, Spotify is using its data as a chip in the label negotiations and hopes they will unlock significant margin opportunities – could Pandora and Live Nation do the same in the US?" Ambitions and Capacity to offer artists a place to promote their music. "
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