Analyst: Of Pandora’s Suitors, Sirius XM Is Best


As RBC Capital Markets lead technology analyst Mark Mahaney sees it, Pandora Media has four potential suitors.

Three of the companies Mahaney notes are the giants of digital and tech.

One is the home of Howard Stern, and that’s the best wedding partner for Pandora, in Mahaney’s opinion.

Speaking Tuesday (12/6) on CNBC’s Squawk Box, Mahaney singled out Amazon, Apple and Google parent Alphabet as three companies that could realistically consider a bid for Pandora.

“But,” he said, “the one that makes the most strategic sense is Sirius.”

Mahaney pointed to synergies between the two companies, one being focused on satellite radio programming delivered via satellite and through an App, the other looking to step beyond artist genome-based playlists and being an alternative to FM and Sirius XM in a world with Spotify and Tidal.

There are also advantages that Pandora brings to Sirius XM, he added: Pandora is an ad-supported model, whereas Sirius has a subscription-supported model.

“In the future, we are probably going to have both,” Mahaney said.

The comments came as Pandora on Tuesday held a special unveiling ceremony for its forthcoming and heavily promoted $10 per moth subscription service.

Mahaney said that it is “highly uncertain” if it will gain traction, given the market share of Spotify and Apple Music. But, he says Pandora users won’t necessary leave unless there is greater technology and opportunity elsewhere, giving the company many positives once the service is up and running.

Investors positively responded to the CNBC report, just as they did on Friday, when a network report from David Faber suggesting that Pandora is no longer resistant to merger talks with Sirius XM directly resulted in a 16% surge in Pandora’s stock.

With 20 minutes to go in Tuesday’s trading session, shares in “P” were up 2.8%, to $13.75 per share.

Jason Helfstein, an analyst with Oppenheimer, thinks they can go much higher.

He upgraded his rating on Pandora from “Perform” to “Outperform,” solely based on the Faber report that Pandora and Sirius XM are dancing once again.

“We believe there are significant demographic/operating synergies between P/SIRI, and view a takeout as a legitimate possibility following press reports (namely, CNBC’s) indicating SIRI has renewed interest, and subsequent 16% rally,” Helfstein said in a report distributed Tuesday and shared by CNBC.

Helfstein established an $18 target for Pandora, which he says is “the low end of our $18-$21 takeout value.”