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TheStreet Open House

Google or Yahoo Buying Pandora Makes a Ton of Sense

NEW YORK (TheStreet) -- Somebody at CNBC found last Wednesday's Will Apple Buy Pandora? article interesting so I broke my self-imposed television hiatus and joined Brian Sullivan and Mandy Drury on "Street Signs."

Driving home I got to thinking about the dynamics of an Apple (AAPL) takeover of Pandora (P). Dynamics that -- with a few situational tweaks -- apply to most scenarios where somebody buys Pandora. It's always fun to use Apple as the suitor because ... it's Apple and everybody wants it to buy somebody.

However, as I continued to noodle, I determined it wasn't wise to go with the crowd and theorize something I really don't see happening. As I said on CNBC and in countless articles at TheStreet, Apple nails balls to the wall as a hardware company. There's no need to own individual features that -- as part of a much larger whole -- drive device sales and related revenue.

My thought trajectory swirled and, without fail, brought me back to Google (GOOG) as the most logical choice to put Pandora out of what will soon be -- if the company continues on the present and limited path -- its misery. Google could take Pandora and do things with it Pandora management hasn't entertained with any meaningful cognition while creating the ultimate synergy between Internet radio and YouTube. And my blood flows real hard when I think about the things Google could do with Pandora's historical and real-time data.

Pandora requires a mercy killing to keep it alive. To ensure it achieves its full potential. Google could get it done by booting out segments of a Pandora management team mired in stubborn tunnel vision that's set to hit a wall.

Billboard recently reported that Google's holding back on a YouTube streaming service because it wants "to 'get it right.'" Or could it be that Google's contemplating some M&A as the cornerstone of whatever it does -- musically and with data -- at YouTube and beyond?

In any event ...

Here's What a Google Buyout of Pandora Could Look Like

A Google buyout of Pandora includes -- or at least should include -- four primary components:

  • The music/radio component ... particularly how buying Pandora would improve Google's position as a streaming/Internet radio player.
  • The YouTube component ... particularly how Pandora can help focus and improve YouTube while YouTube expands and diversifies Pandora. The ideal complementary (and complimentary) relationship.
  • The data component as it pertains to advertising.
  • The data component as it does not pertain (directly) to advertising.

We'll take these areas point-by-point. And, because (to some extent) Yahoo! (YHOO) makes as much sense as Google, we'll throw in thoughts that pertain specifically to the powerhouse Marissa Mayer's building.

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