According to a couple of anonymous employees who spoke to the New York Times, top music streaming service Pandora is in preliminary talks with potential buyers, hand in hand with asset management firm Morgan Stanley. Morgan Stanley has been helping Pandora execs to meet with potential buyers for preliminary discussions by setting up appointments and running pre-meeting negotiations and relations. According to the tipsters, nothing is set in stone just yet and they refused to name any potential suitors at this time.
This move comes during strange and arguably dour times for Pandora. Stock prices have recently plummeted, down 60 percent just between October 2015 and now, only a five month stretch. Their total market value of $1.8 billion is down hard from $7 billion only two years ago. Revenue and profits are also down, as is the total user base, by roughly 3 million since 2014. Despite falling on these hard times, Pandora recently scooped up troubled competitor Rdio for $75 million and dropped $450 million to buy up Ticketfly and sell concert tickets to Pandora users directly. Of their currently reported 78.1 million users, only 3.9 million are paying the $5 per month to remove ads, leaving Pandora to foot the bill for recently increased royalty fees mostly from their ad revenue. The royalty rate for non-paying users of services like Pandora and iHeartRadio was recently increased to 17 cents per 100 plays. At 17 cents per 100 plays across over 74 million users, that could add up fairly quickly. After the market closes for the quarter on February 11, Pandora is expected to announce their figures for quarter four of 2015, as well as the full fiscal year, giving a more accurate picture of the company’s finances.
Since these talks are highly preliminary in nature and technically not meant to be public knowledge just yet, Pandora has not made a comment about this situation, the possibility of selling or any potential buyers. Pandora did make an unrelated statement, however, saying that they wanted to expand their service beyond the U.S., Australia and New Zealand. The New York Times reached out to both Pandora and Morgan Stanley for comment, but got no response. Although the chief executive for Pandora, Brian P. McAndrews, is a director for the New York Times, the silence isn’t terribly strange since this matter could affect stock prices and nothing has been made official yet.