SiriusXM’s acquisition of Pandora, a $3.5 billion deal announced last week, could just be the beginning of the satellite radio giant’s ambitions. For years, Wall Street analysts have been speculating if the company might join forces with live events powerhouse Live Nation Entertainment, which also owns Ticketmaster — and the likelihood of that seems to have ticked up after its Pandora purchase.
There are a few key points to suggest SiriusXM’s interest in Live Nation: The two companies are both under the umbrella of mass media giant Liberty Media, which owns 34 percent of Live Nation and 72 percent of SiriusXM; Liberty’s CEO Greg Maffei is the chairman of both; as music-streaming services continue to force competition in the industry, a merger between the two groups could create one lucrative music distribution company that controls several different access points for fans in the music market. Liberty Media has also made plays in the past for radio broadcasting giant iHeartMedia, suggesting Maffei’s interest in marrying major music companies together. With SiriusXM now in control of Pandora, the company’s fusion with a second big player with advertising power and brand relationships — and one with which it already has close ties — may be a natural course.
“SiriusXM and Pandora has merit, but Live Nation completes the puzzle,” BTIG Research analyst Brandon Ross — who has called the merger of the two companies “inevitable” for two years and said this summer that investors increasingly believe it to be as well — wrote in a note last week. Pandora and Live Nation have “numerous synergies” between them, he said, such as the potential to leverage the former’s large platform and sponsorship strengths for marketing and promotion of tours. Ross also pointed out that SiriusXM’s all-stock financing in its Pandora deal makes little sense for a company with such “cash firepower,” and that “perhaps Sirius is saving that cash for an eventual cash component to a Live Nation deal.” The addition of Live Nation to the portfolio certainly “could be compelling,” Macquarie Capital analyst Amy Yong has said as well.
But for now, any merger or acquisition talks are just speculation. On a corporate conference call following the Pandora announcement on Monday, Ross asked SiriusXM about a potential Live Nation acquisition, and CEO Jim Meyer responded with a bit of equivocation: The company has “done the math” and “certainly [has] the firepower to do other things if we want to,” he said, but such an deal is “not on my mind right now.”
Yet the music industry and Wall Street are both keeping their eyes peeled. At an investor conference in January, SiriusXM CFO David Frear denied any interest in major mergers and acquisitions, saying the company is “just a cash-flow machine. We look at ways to deploy the capital and grow the business, first through organic investments.” But, he added: “We’re constantly looking. And when we see things of value, we’ll go.” Little over half a year later, the company spent $3.5 billion to take control of the largest digital audience in America.