SiriusXM Takes $1 Billion Hit on Pandora as Music Royalty Costs Surge
SiriusXM anticipates a $1 billion impairment charge for Pandora, primarily due to increasing royalty costs and the streaming platform's operating performance. The announcement came ahead of the company's Q4 2020 earnings call.
Pandora logo on blue background
Despite this setback, SiriusXM reported strong performance metrics:
- Added 900,000+ net self-pay subscribers (total: 30.9 million)
- Expected to meet or exceed 2020 revenue guidance
- 2021 projections: 800,000 new subscribers, $8.35 billion revenue, $1.6 billion free cash flow
Notable company developments:
- Jennifer Witz succeeded Jim Meyer as CEO
- Acquired Stitcher podcasting platform for $325 million
- Renewed Howard Stern's contract
- Secured expanded NBA broadcasting rights
- Became exclusive audio broadcaster for 2021 Masters Tournament
The impairment announcement impacted SiriusXM stock (SIRI), which declined from $6.37 (end of 2020) to $5.94, marking its lowest closing value since early January 2021.
CEO Jennifer Witz remains optimistic, stating "SiriusXM has a long runway of growth ahead of us in 2021 and beyond," highlighting recent acquisitions and partnerships as growth drivers.
The expanded NBA agreement provides live audio broadcasts for all games to SiriusXM Premier Streaming Package subscribers, while the Masters Tournament deal includes comprehensive play-by-play coverage across all four tournament days starting April 8th at Augusta National Golf Club.
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