Pandora Media is shaking up its board to help consider options, including a sale, the world’s largest digital radio service said as it reported a that its losses had widened from a year ago.
Pandora said it has raised $150m from KKR, the private equity group, and two board members have resigned. The investment will help the company “evaluate any potential strategic alternatives, including a sale” said James Feuille, one of the departing board members.
The radio service has been under pressure from activist shareholders, dissatisfied with the company’s losses, to explore a sale, with rumours of Liberty Media’s SiriusXM as a potential buyer. The company earlier this year said it would cut about 7 per cent of its workforce.
Shares in Pandora rose 5 per cent in after hours trading. The stock has lost 20 per cent this year.
In the first quarter, Pandora posted steeper losses as the company tries to turnround its business and compete with Spotify in music streaming.
Pandora reported a first-quarter loss of 24 cents a share on 316m in revenue, widening from a loss of 20 cents a share in the same period a year ago. However earnings were less stark than Wall Street analysts had predicted, with an average forecast for a loss of 34 cents a share, on sales of $318m.
The radio service, facing sluggish user growth and ad sales, is looking to convince people who use its free service to start paying. In the past year as more people signed up to pay for music streaming, the industry has heralded subscription streaming as the format that will propel music to a more stable business model.
However, Pandora faces a field crowded by Spotify and the world’s largest technology groups, such as Apple and Google. Spotify and Apple together boast 70m paid subscribers, to Pandora’s 4.7m.
Pandora said it has signed up nearly 1.3m customers to its paid subscription services since mid-March. This includes more than 500,000 for “Premium”, a $9.99/mo service that Pandora debuted in March to mimic Spotify’s paid product. Total paying customers grew to 4.7m in the quarter, from 3.9m a year ago.
“Although it remains early days, we are enthusiastic about the launch of Pandora Premium,” said Tim Westergren, chief executive, adding that the results were “consistent with our expectations”.