Pandora cofounder Tim Westergren is planning step down as CEO of the streaming radio company, according to a report in Recode published late Sunday. A source told the publication that the company has not found a new CEO and Westergren will likely stay on until a replacement is lined up. Reached by Variety, a rep for the company declined to comment early Monday.
The news comes at a turbulent time for the company, which was one of the first widely embraced streaming services but has lost ground — and many millions of dollars — in recent years. The company recently got a boost in the form of a $480 million investiment from SiriusXM announced earlier this month — although that deal has not closed — and $200 million from the sale of its Ticketfly business to Eventbrite.
It seems possible the move is part of the Sirius deal, which sees the radio giant acquiring a 19% stake in the company and three seats on Pandora’s board. Westergren served as the company CEO from 2002 until 2004 but then became chief strategy officer; a series of executives succeeded him most recently Brian McAndrews, who Westergren replaced as CEO in March 2016.
Sirius XM has done well with its existing satellite radio subscription business, generating $5 billion in revenue and $746 million in net income in 2016. The company had 31.6 million subscribers at the end of Q1 of 2017, and expects to add 1.3 million paying subscribers in 2017.
However, Sirius’ business is highly dependent on the automotive market, which is changing as cars are becoming connected, capable of accessing other services over the internet. Sirius isn’t just lacking an internet strategy, the company also doesn’t have a real answer to the growing popularity of on-demand streaming services like Apple Music and Spotify.
The Pandora investment represents a kind of long-term insurance policy for Sirius against these market shifts. What’s more, with a stake in Pandora, Sirius is also for the first time set to profit from ad-supported radio, allowing it to attack traditional terrestrial radio on two fronts. At the same time, Sirius doesn’t have to shoulder all of Pandora’s risk in a volatile market that is highly dependent on licensing agreements.
Pandora has spent the past 18 months on a radical transformation, a process that culminated with the launch of its premium tier in March. Before that, Pandora was primarily focused on ad-supported streaming. Now, it is also offering a full on-demand service to directly compete with Spotify and Apple Music. Pandora’s plan is to convert a significant subset of its free user base to paying subscribers, and then operate both free and paid streaming complementary, a recipe that has fueled Spotify’s massive growth.