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Notable earnings before Friday’s open
http://www.seekingalpha.com/news/3194840
AT&T -1.3% after Q2 revenues miss despite DirecTV gains
http://www.seekingalpha.com/news/3194954
AT&T EPS in-line, misses on revenue
http://www.seekingalpha.com/news/3194904
Liberty Media CEO Floated $15-a-Share Offer for Pandora Media
Source: Dow Jones News
Liberty Media Corp. Chief Executive Greg Maffei, whose company controls satellite radio giant Sirius XM, hasn't been very complimentary of streaming music services in recent months.
"We have looked at the business models on a bunch of the streaming companies and found it very hard to see them [as] attractive," Mr. Maffei told investors at a March conference.
Behind the scenes, it is a more complex story. In recent months, Mr. Maffei floated an offer to internet radio company Pandora Media Inc. for roughly $15 a share, several dollars more than where shares were trading at the time, people familiar with the matter said. That would have valued the company at more than $3.4 billion.
Mr. Maffei's bid didn't have the characteristics of a formal offer, one of the people said, appearing to be more of "a fishing expedition." Pandora's board rebuffed the advance, the people said, because it believes the company's true value is closer to what it was in the fall, when the shares were trading around $20, the person said. Pandora had shopped itself to other potential buyers including Apple Inc. and Amazon.com Inc. earlier this year, others familiar with the matter said.
Later, in a private June investor meeting in Denver, Mr. Maffei talked up the benefits of a potential Sirius-Pandora tie-up, according to people who were there. Asked during the meeting why a deal hadn't been sealed yet, he told attendees, "You'd have to ask the Pandora board."
Now investors are wondering whether Mr. Maffei will raise his bid—and what he might do with the prize.
Liberty Media could combine Pandora with Sirius XM, which it controls through a 64% stake. The satellite radio company has built a profitable subscription business on strong partnerships with car manufacturers. But it faces a looming threat from the rise of streaming media and internet-connected cars: Will customers continue paying $15 a month when they can easily stream music in their cars through cheaper or free services on their dashboards?
Pandora would instantly give Sirius scale in streaming, with 80 million listeners who mostly tune in on their mobile phones. But Pandora, which generates revenue largely from advertising, has an entirely different business model and much higher content costs than Sirius XM.
The satellite radio company pays less than 11% of revenue on recorded music royalties through next year, in accordance with federal licensing rules.
Pandora, in contrast, spent 52% of its revenue last year on music costs since internet radio firms pay on a per-stream basis.
In an interview, Sirius XM Chief Executive Jim Meyer declined to comment on any approach to Pandora. But he said that since his company represents a $5 billion part of the $25 billion radio business, he often kicks around whether he would like to have a bigger play in the business or not.
Sirius already has its own mobile app, though few use it, and it is working to offer a satellite-streaming hybrid next year with personalized recommendations and customization.
"I don't need any streaming partner to do that," Mr. Meyer said. But, he emphasized, "We will do whatever we need to for our customers to keep paying us."
Some analysts and investors believe Liberty Media could house Pandora separately from Sirius XM. Indeed, it could match up with the concert and ticketing business of Live Nation Entertainment Inc., in which Liberty Media has a 34% interest.
Meanwhile, Pandora has been going through a tumultuous period. Its shares tumbled last October when Pandora announced a $90 million settlement payout to record labels over its unpaid use of pre-1972 music. It also reported a dip in listening due to Apple Music's launch. Pandora shares, which had traded as high as $40 in 2014, have fallen to $12.35.
The cost outlook brightened in December when the Copyright Royalty Board announced the internet radio company would pay far lower rates for music than record labels and artists had been pushing for.
In March, Pandora replaced Chief Executive Brian McAndrews with its charismatic founder Tim Westergren, who has since played down sale rumors. Asked about interest in buying Pandora at a June investor conference, Sirius Chief Financial Officer David Frear noted that "among the streaming companies, Pandora has a better opportunity for a solid business model" and "the better opportunity to make money."
Ryan Knutson contributed to this article.
Write to Hannah Karp at hannah.karp@wsj.com, Shalini Ramachandran at shalini.ramachandran@wsj.com and David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
July 21, 2016 12:35 ET (16:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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