Could A Deal For Pandora Be In The Works?

Pandora last week finally ended its months-long CEO search, naming former aQuantive Brian McAndrews as its new CEO.

According to The Motley Fool, the hiring has launched plenty of speculation that Pandora could become positioned to be gobbled-up by SiriusXM or even Microsoft.

Here’s the thinking….McAndrews was the CEO of aQuantive, an online marketer that was eventually gobbled up by Microsoft in a $6-billion deal. He then went on to head up Microsoft's online advertising division until leaving the software giant in 2009.

Brian McAndrews

McAndrews isn't the terrestrial radio guru that Mel Karmazin was before winding up at Sirius XM. His specialty has been digital marketing. Then again, this is exactly what Pandora needs. The 71.2 million active listeners who streamed 1.35 billion hours of content last month aren't there for the programming. Pandora's a technology-driven company that serves up millions of tunes based on a proven platform that serves up personalized playlists. It doesn't need Karmazin to woo Howard Stern or Martha Stewart over. It just needs to monetize its costly bandwidth and licensing fees through advertising. In that sense, McAndrews is perfect for the job says the MotleyFool.

However, just as he built up aQuantive, only to hand it over to Microsoft for billions, this could be a prelude to a Microsoft buyout?

The Motley Fool also says one can't dismiss Sirius XM as a potential buyer.

It's far less likely, though. Sirius XM is investing its cash flow in buybacks, and it already announced a beefy acquisition this summer to have some more skin in telematics. However, Sirius XM would be the king of all growing audio media if it operated the satellite radio monopoly and the top dog in streaming.

For now, it's highly unlikely that Pandora and its investors would even pursue an exit strategy. The stock's trading within loose change of another two-year high, and any purchase would have to take place at a stiff premium to the stock's already lofty valuation. Then again, we know that Microsoft has a habit of overpaying for acquisitions. It did exactly that the first time it shook hands with McAndrews.