This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

How Apple Will Force Sirius to Face the Music

When Pandora released its audience metrics for March, it showed the company's share of total U.S. radio listening grew 13% year over year to 9.11%. Last year, Pandora had 8.05% share. While reporting that it had 75.3 million active listeners, Pandora also achieved a landmark of 250 million registered users in the U.S.

Pandora's music genome platform, which gives listeners the ability to customize their music, has helped turned Pandora into a sticky service. This means that Americans love their jukebox. The problem is Pandora doesn't know how to make money. The more it grows in popularity, the more money it has to shell out in royalties.

Likewise, Sirius' main issue is that its business model is too closely tethered to auto sales. By contrast, Pandora's personalized music service can be accessed from a variety of ways, including tablets, PCs, smartphones and most car audio systems -- pretty much, anything with an internet connection. But Pandora also has a growing subscription service and the ability to grow advertising revenue.

As royalty fees continued to chew through the company's bottom line, Pandora hopes to mitigate this by raising the subscription service. The other potential growth area is advertising. Advertising revenue can become that dominant second stream of revenue Sirius lacks. Sirius has also talked about the connected car.

Its acquisition of Agero has excited investors. But Sirius is a radio/entertainment company. I don't see how Sirius can out-innovate Apple or Google (GOOG) in an area where technological advantages are required. Not to mention expensive capital investments. Sirius will not outspend Apple or Google.

But if it does buy Pandora, Sirius will raise its own acquisition profile. Its entertainment offerings immediately become more attractive. It's not out of the question that Microsoft (MSFT) would become interested. And with Pandora stock in a freefall, now is the time for Sirius to face the music and make the deal.

At the time of publication the author had a position in AAPL.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SIRI $3.95 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs