Rdio Will Shut Down and Sell Some of Its Assets to Pandora for $75 Million
Pandora, the online radio service with personalized music channels, has agreed to acquire several assets from Rdio, a music streaming service in competition with Spotify and Apple Music, among others, the companies said on Monday.
As part of the deal, Pandora (P) is only acquiring intellectual property and technology from the company, and will offer jobs at the company to many of Rdio’s employees. Rdio’s licensing deals will not be transferred, the companies said in an investor call on the matter. Pandora will pay $75 million in cash for the purchase, or just over half the $125 million in funding Rdio has raised to date.
Another notable detail is that the entire acquisition is contingent on Rdio’s bankruptcy. The company is seeking protection in the United States Bankruptcy Court for the Northern District of California, signaling it was likely not doing well financially at all. Though Rdio has had loyal fans throughout the years even in the face of Swedish music streaming giant Spotify, the arrival of Apple into the space and other players might have proven too much for the startup.
As for Pandora, the deal will likely help it compete with those same companies and placate critics who have called for the company to start directly competing with Apple and Spotify. This move is only the latest in Pandora’s attempt to round out its business with additional services. In October, the c0mpany said it has agreed to acquire ticketing service Ticketfly for approximately $450 million.
Pandora said it plans to debut “an expanded Pandora listening experience,” which will presumably include music streaming, by late 2016, provided it gets the licenses it needs. The company will likely continue to provide both free, ad-supported versions of its services as well as paid ones without the ads.
Following the announcement, Pandora’s stock saw a small bump to $13.45, up 0.22% from its price at the day’s close.