Pandora Media Shares Jump After Liberty CEO Seems To Warm To A Deal

Liberty Media CEO Greg Maffei seemed to change his tune slightly today when it comes to a possible deal with SiriusXM buying Pandora Media.

The streaming music company’s shares jolted to a 2% gain after Maffei, whose company owns 66% of the satellite radio provider, called Pandora “a really interesting asset.”

“You have to give them credit,” he told the Morgan Stanley Technology, Media & Telecom Conference. “Depending on how you look at it, it’s either the seventh or the ninth or the fifth most [used] app among Americans. Great product — way under monetized.”

He also lauded its “big dreams around subscriptions” although “we’re not necessarily convinced” of the potential. “But you have to be impressed with somebody with an 80 million audience listening 20 minutes a day.”

That contrasted with Maffei’s comment yesterday, in an earnings call, that suggested Pandora’s stock price — lifted by deal speculation — has made the company too expensive.

Pandora’s price fell 6.1% after he said that it’s “not clear that the valuation makes sense…At the right price, interesting. Not clear this is the right price.”

Pandora has a market value of about $2.6 billion; its value increased more than 19% over the last 12 months, in part due to investor speculation about a possible sale. SiriusXM is at $24 billion.

Other comments today seemed to suggest that SiriusXM would benefit from an alliance with Pandora, which is primarily ad-supported.

When it comes to selling ads vs. traditional radio “Pandora is undermonetized in that space.” Radio advertising is “a big pool of money. We try to think of ways to go after that pool of revenue.”

He also noted that SiriusXM has to think about competition as cars increasingly connect to wireless broadband. “Our satellite connection will not be the only connection to the car,” Maffei says. “But there are many capabilities and features that we have and can do better with having a connected car.”

Also, some of SiriusXM’s spectrum could be repurposed “if you think long term.”

On other fronts, Maffei says that he doesn’t worry about Howard Stern leaving SiriusXM: In his latest contract “we locked up not only his current rights but a whole bunch of library rights and a bunch of other things.”

And sports services including ESPN “don’t have the leverage they once had.”

Asked about mergers in the cable industry, the Liberty CEO — whose company is the biggest owner of Charter Communications — says “there’s room for more consolidation.”

He lauded the change in philosophy at the FCC after President Trump picked Ajit Pai to be its chairman. That “leveled the playing field” vs. tech companies “around privacy, our build out requirements, potentially net neutralilty…lots of good stuff on that side. But also probably on the regulatory side in terms of M&A as well.”

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