Capping a tumultuous 12 months for the music-streaming pioneer, Pandora is losing founder and CEO Tim Westergren in addition to its president and chief advertising officer. The departures sign a bigger affect of SiriusXM, which not too long ago purchased a 19 p.c stake within the firm, and leaves the money-losing firm’s destiny unsure.
Westergren cofounded Pandora and has served as an govt and board member since 2000. He returned to the position of CEO in March 2016 amid concern that his predecessor, Brian McAndrews, was shedding floor in opposition to rivals akin to Spotify and Apple Music. On the time, Michael Herring additionally joined as CFO, whereas Nicholas Bartle got here on as chief advertising officer in October.
Now all three are gone. Pandora mentioned that Naveen Chopra, a former TiVo govt who joined Pandora as CFO in February, will function interim CEO whereas the corporate conducts a seek for a everlasting CEO. Throughout his tenure, Westergren made aggressive strategic strikes to strengthen Pandora’s operations, together with new licensing agreements with music labels and a $10-a-month premium service geared toward competing with Spotify and Apple Music.
“I came back to the CEO role last year to drive transformation across the business. We accomplished far more than we anticipated,” Westergren mentioned in an announcement. “With these in place, plus a strengthened balance sheet, I believe Pandora is perfectly poised for its next chapter.”
The strikes Westergren made, whereas obligatory, might have come too late. Pandora’s inventory fell as little as $6.87 final week, its lowest stage because the firm went public in 2011. Pandora burned by way of $182 million in money final 12 months and one other $36 million within the first quarter of 2017. Had been that burn price to proceed, the corporate dangers depleting the $171 million in money remaining in its coffers.
Final month, Pandora acquired a lifeline within the type of a $480 million investment from SiriusXM in trade for a 19 p.c stake within the firm. On the similar time, Pandora additionally bought Ticketfly to Eventbrite for $200 million, properly beneath the $335 million it paid for the ticket-distribution service in 2015.
In saying the SiriusXM funding, Westergren tweeted, “A big day for us at Pandora. The start of our next chapter.” That new chapter received’t embrace Westergren, and it begins with three key management roles empty and no long-term successors in sight. Westergren’s resignation was first reported by Recode on Sunday.
As an alternative, Pandora’s future is more likely to be decided by SiriusXM in addition to Liberty Media, which owns 65 p.c of the satellite tv for pc radio firm. SiriusXM controls three of Pandora’s eight board seats. A type of three new members will change into Pandora’s new chairman, doubtless Liberty Media CEO Greg Maffei.
In announcing at this time’s departures, a Pandora assertion described it as “driven by a focus on optimizing shareholder value.” That implies Pandora might shift its focus to enhancing its monetary efficiency, even when it means much less investments in campaigns that would add to subscriber development.
The news has left Pandora’s inventory risky as traders grappled with the corporate’s unsure outlook. Its inventory initially rose on news of Westergren’s departure. Pandora is down 1.four p.c at this time, buying and selling round the place it closed Friday. Some analysts upgraded the inventory on anticipation that the corporate would introduce extra monetary self-discipline.
“Lowering the burn rate may also lower subscriber growth forecasts,” Pacific Crest analyst Andy Hargreaves wrote in upgrading his score on Pandora to Sector Weight. “But we would view this trade-off positively as it would reduce the odds of insolvency and extend Pandora’s time frame to try to find a sustainable model.”
One other state of affairs that’s wanting extra doubtless is a sale of Pandora to a different firm — maybe Liberty Media itself. In Could, hedge fund Corvex Administration bought a 9.9 percent stake in Pandora and commenced urging the corporate to discover a sale as a substitute of pursuing “a costly and uncertain business plan.”
Solely a 12 months in the past, Westergren insisted that firm wasn’t on the market, saying he “got back in the saddle” to construct Pandora’s long-term enterprise. However as Westergren has famous extra not too long ago, he’s not writing Pandora’s subsequent chapter anymore.