A new report indicates that music streaming service Pandora has rejected a takeover offer floated by Liberty Media CEO Greg Maffei. The news comes as the company reports wider losses, which it hopes to mitigate by adding more podcasts to its broadcast mix.
The offer was set at $15 a share, and was rejected by the Pandora board of directors who reportedly feel that the valuation of the company is closer to $20 a share. Talks are said to not have gotten much further after the initial offer was rejected, and speculation is that Liberty may have been putting out a feeler to see what Pandora may in fact be willing to accept.
The rejection of the offer does not indicate, however, that Pandora is not actively welcoming suitors. A recent report claimed that the company hired Morgan Stanley in order to explore takeover opportunities.
Subsequent to the report, Pandora has reported its Q2 earnings, which showed a steep increase in operating losses year-to-year. The company experienced net losses of $76.3 million in Q2 2016 as opposed to a reported net loss of $16.1 in Q2 2015. Revenue was up, however, as compared with Q2 2015. While listening hours were also up 7 percent, the number of active listeners in the quarter was down year to year by over a million, a disturbing sign.
In the company's earnings call, Chief Operating Officer Sarah Clements explained that the company is now focusing upon adding more non-music content to its mix in order to increase listening hours.
"Half of Pandora users are already consuming non‐music content weekly on alternate platforms," Clements said.
The addition of various podcasts and other non-music content is also much less expensive than music streaming, as payments to copyright holders, which compose a sizeable portion of Pandora's revenue, are not required.
One of Pandora's concerns is the tough competition from other streaming services such as Apple Music, Spotify and Tidal, along with iHeartRadio, which runs a radio-based music streaming platform that operates in a similar way to that of Pandora, and has been experiencing hearty growth recently, much of which is likely at Pandora's expense.
Pandora plans to counter soon with its own on-demand streaming service more similar to Spotify's and Apple's offerings, and built with the same team that developed former streamer Rdio, which Pandora recently acquired. Pandora CEO Tim Westergren claimed that the company is making great progress with the on-demand platform, but gave no firm launch date for the product.
