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Will Pandora Internet Radio Go Up for Sale?

By William Vogeler, Esq. on May 10, 2017 | Last updated on March 21, 2019

With all the excitement about innovation, sometimes it leaves companies and even industries behind like dead bodies in unmarked graves.

Pandora, the first radio music service online, has fallen victim to innovations by Apple and Spotify. The rumors of its demise are exaggerated, but Pandora may soon be taken over by another company or be forced to borrow more money to survive.

The company reportedly is "confident" that it will be sold in the next 30 days, even as it announced an agreement to take a $150 million investment from a private equity firm. The reports have caused Pandora's stock to rise and fall, and it signals some significant changes ahead.

Significant Changes

Business publications speculate that Pandora will have to change because music now is largely a feature of streaming services, which offer it on demand. The company began the transition two years ago when it bought Rdio in 2015 for $75 million, but Spotify and Apple took over the market in the meantime.

Sirius XM radio offered to buy the company last year, but Pandora apparently turned it down. Meanwhile, Pandora laid off seven percent of its workforce earlier this year and the stock has been up and down on the buyout and investment reports this week.

"With radio becoming merely a feature of other streaming services, Pandora must reinvent itself," Tech Crunch said.

Buyout Make Sense?

Last year, Pandora was stuck between a rock and a harder place about whether to sell or borrow. According to reports, the company enlisted Morgan Stanley to look for interested buyers. No one bought -- at least not for the right price.

Observers blamed the company for failing to adapt to the times, when it should have capitalized on its early entrance into the digital music service.

"Pandora enjoyed a massive first-mover advantage to establish itself as the dominant player in this space," according to The Motley Fool. "But a myopic focus on online radio alone allowed both Apple and Spotify to get a leg up."

If a buyout doesn't materialize in the next 30 days, as Pandora suggests, then it will take the investment and build. While the company lost listeners in the first quarter, it gained 25% more from ticketing revenue since it purchased Ticketfly in 2015.

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