Pandora Media Inc. (P) can have its cake, but it won't be able to eat it, too. At least that's true for CEO and co-founder Tim Westergren, according to Recode's Peter Kafka.
Westergren, who returned as CEO in early 2016, plans to leave the company once a replacement is found, Recode reported Sunday, June 25, citing people familiar with the company's plans. Westergren will remain at Pandora until a successor is found, the website reported.
A Pandora spokesman declined comment.
Pandora shares were gaining Monday morning on the news that Westergren may be leaving the company, jumping 1.8% to $8.43, trimming its 2017 decline to 35%. A stock upgrade from Pacific Crest Securities Inc. also bolstered the shares.
The potential leadership shakeup comes less than two weeks after Sirius XM Holdings Inc. (SIRI) - Get Report agreed to invest $480 million in the internet radio provider in exchange for a roughly 19% stake in the Oakland, Calif., company. Sirius XM is controlled by Liberty Media Corp. (FWONA) - Get Report , a holding company led by Greg Maffei and principal owner John Malone, the cable TV billionaire. Once that deal closes later this year, Sirius will control three of nine seats on Pandora's board of directors.
Over the past year, Maffei alternated between lauding the reach and sophistication of Pandora's internet radio service and criticizing management for how the company operated. Maffei repeatedly panned as a fool's errand Pandora's decision to launch an on-demand service when that business is already dominated by Spotify and the media/tech conglomerates Apple Inc. (AAPL) - Get Report , Amazon.com Inc. (AMZN) - Get Report and Google, a unit of Alphabet Inc. (GOOGL) - Get Report .
Despite amassing a service with some 80 million monthly users of its free ad-supported radio service, Pandora continues to operate in the red. The company, which went through a series of CEOs before Westergren's return, has lost money in each of the past nine quarters. Pandora Premium, the company's on-demand service, began in March but continues to trail its rival.
Sirius is eager to integrate Pandora into its own satellite radio service, which ended 2016 with 31.3 million subscribers. Leveraging deals with auto manufacturers, Sirius XM was preinstalled in many new cars whose owners were given as much as one year of free service. Yet as cars become better wired with broadband services, Sirius is confronting more competition for its place in the so-called connected car.
With Pandora, Sirius will have access to an enormous listener base and a service widely-recognized for its ability to match songs to users' musical preferences. The service should allow Sirius to add advertising sales to its satellite radio subscription model.
Yet doubts remain about Pandora's ability to grow given its reliance on advertising, a challenging business dominated by Google and Facebook Inc. (FB) - Get Report , and its late entry into on-demand streaming, which allows users to pick their songs and create shareable playlists.
"We continue to view fundamentals as challenged but believe the combination of reduced M&A expectations and the likelihood for an increased focus on stabilizing cash flow reduces downside risk," Pacific Coast Securities media analyst Andy Hargreaves wrote in an investor note Monday. Hargreaves noted, though, "Prospect of more disciplined management is unlikely to overcome a bad model."
Pandora's shares rebounded last week after a plunge the preceding week that added to a selloff in 2017.
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