Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now


An Investor Mulls Apple, Pandora and Sirius

‘I believe it is logical to conclude that Pandora and its service are not set up for long-term growth’

Radio business insiders tend to be interested in how outsiders, particularly those in the investment community, view our industry.

A recent entry by Brian Nichols of the stock market blog Seeking Alpha offers one perspective on the future of radio and broadcasting with a informal business analysis of Sirius XM, Pandora and — because of its iTunes property — Apple.

Nichols (who describes himself as a value investor) begins with a mostly glowing review of iTunes, naming access as its only drawback, given the time involved in acquiring all your desired content. (A few commenters to his blog offer their opinion that iTunes “isn’t radio”; but its inclusion is informative about how audio content consumption is viewed now in the wider world.) He claims that with the constant addition of new content to iTunes’ catalog, growth will remain strong into the future.

His review of Pandora is mixed. Nichols calls Pandora an innovating company that is growing at an alarming rate and delivering a great product. He feels it may just be a fad at the height of its use and not profitable, despite high revenues. “I could easily see a company such as Google building on Pandora’s technology and taking internet radio to a higher level.” The numbers are interesting though, with $67 million in revenue ($58.3 million in ads, $8.7 million from subscriptions), of which approximately half goes straight out the door to cover royalties.

Sirius XM is Nichols’ favorite of the bunch and he gives it the most virtual ink, although the company is made out to be the old dog of the bunch, as it has learned no new tricks. Nichols notes its overall ability to improve revenue despite offering no new services in recent memory.

He notes that some believe the company’s future is hinging on the release of Sirius 2.0 and connectivity technologies such as WiFi, Bluetooth and the Internet to compliment its core radio services. The new device should calm investors who are afraid the company may lose out to Pandora, Clear Channel’s iHeartRadio and other similar services.

Interesting reading.