Following Cumulus Media writing down its investment in Rdio, the streaming service will sell their key assets to Pandora for $75 million.
The deal is contingent on Rdio first filing for bankruptcy protection. Following approval of the deal by the United States Bankruptcy Court for Northern District of California, Rdio will wind down their Rdio-branded service in all markets. Pandora will acquire Rdio’s technology and intellectual property and offer jobs to many of Rdio’s employees. Pandora also states it will offer “an expanded listening experience” pending ability to acquire content rights by late 2016.
Cumulus had acquired a 15% stake in Rdio in September 2013 in exchange for Cumulus provided content and the sales services. It took until August 2015 for Cumulus stations to appear on the service at which time Rdio added a free ad-supported version of their service. At their quarterly earnings report in October, Cumulus announced it was walking away from its investment in Rdio and taking a write-down on its value.
Pandora (NYSE: P) announced an agreement to acquire several key assets from Rdio, a pioneer in streaming music technology. This will accelerate the company’s plan to offer fans greater control over the music they love, strengthening Pandora’s position as the definitive source of music.
“Whether streaming through radio, on-demand or in-person at live events, Pandora is building the definitive source for fans to discover and celebrate music,” said Brian McAndrews, chief executive officer at Pandora. “Wherever and however fans want to hear music, we intend to be their go-to destination.”
In addition to acquiring technology and intellectual property from Rdio, many members of Rdio’s team will be offered roles with Pandora, subject to close of the agreement. The company expects to offer an expanded Pandora listening experience by late 2016, pending its ability to obtain proper licenses.
More details about Pandora’s future vision will be shared during an investor call today at 1:30 p.m. PT.
The purchase price is $75 million in cash, subject to certain purchase price adjustments.
“We are defining the next chapter of Pandora’s growth story,” continued McAndrews. “Adding live music experiences through Ticketfly was a transformative step. Adding Rdio’s impressive technology and talented people will fast-track new dimensions and enhancements to our service. I couldn’t be more optimistic about Pandora’s future and the future of music.”
“The Rdio team built an acclaimed product and technology platform that has consistently led innovation in the young streaming industry. I’m pleased that many members of the Rdio team will continue to shape the future of streaming music, applying our tradition of great design and innovative engineering on an even larger stage with Pandora,” said Anthony Bay, chief executive officer of Rdio.
The transaction is contingent upon Rdio seeking protection in the United States Bankruptcy Court for the Northern District of California. Upon approval of the proposed transaction by the bankruptcy court, Rdio will be winding down the Rdio-branded service in all markets. Pandora is not acquiring the operating business of Rdio, and is acquiring the technology and talent to accelerate its own business strategy. The transaction is subject to the approval of the Bankruptcy Court, which will supervise an auction for the assets of Rdio, as well as other customary closing conditions.
