SiriusXM Faces $1 Billion Pandora Write-Down as Music Royalty Costs Soar
SiriusXM has announced a potential $1 billion impairment charge on Pandora, primarily due to increased royalty costs and the streaming service's operating performance.
Pandora logo on blue background
The announcement came ahead of SiriusXM's Q4 2020 earnings call, causing their stock (SIRI) to drop to $5.94 per share, its lowest value since early January 2021.
Despite this setback, SiriusXM reported strong performance metrics:
- Added 900,000+ net self-pay subscribers (total reaching 30.9 million)
- Expected to meet or exceed 2020 revenue guidance
- Projects 800,000 new subscribers for 2021
- Forecasts $8.35 billion in revenue for 2021
- Anticipates $1.6 billion in free cash flow for 2021
Notable recent developments include:
- $325 million acquisition of podcasting platform Stitcher
- New deal with Howard Stern
- Expanded multiyear agreement with NBA for live audio broadcasts
- Exclusive audio broadcasting rights for the 2021 Masters Tournament
CEO Jennifer Witz expressed confidence in the company's future growth potential, despite the Pandora-related charge. The impairment assessment reflects ongoing challenges with Pandora's royalty cost structure while the parent company continues to expand its content offerings and subscriber base.
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