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Pandora Media ( P ) surprised Wall Street on Monday by announcing that current CEO Brian McAndrews is out, to be replaced by co-founder and former CEO Tim Westergren, even as buyout rumors continued to swirl around the Internet music company. Pandora, the top music streaming service, is facing increasing competition from Apple ( AAPL ) Music, privately held Spotify, Amazon.com’s ( AMZN ) Prime Music and Google Play Music, a unit of Alphabet ( GOOGL )-owned Google. Pandora stock was down more than 9% in midday trading in the stock market today , near 10. Pandora stock is down nearly 40% in the past 12 months and slid to an all-time low of 7.10 on Feb. 12 over concerns about competition from Apple Music and others, as well as the company’s slowing user growth and engagement. In a statement, Pandora said Westergren will take over immediately from McAndrews, who has been Pandora’s CEO for less than three years. Westergren co-founded the Internet radio company 16 years ago and served as CEO from 2002 to 2004. “The CEO change came as a surprise, and the timing certainly isn’t optimal from a perception standpoint, given that Pandora’s share price had been rebounding from its 52-week lows,” said Stifel analyst John Egbert said in an industry note Monday. “It’s unclear what the root cause of the change was, whether it was driven by the board, Mr. McAndrews’ decision to leave, or Mr. Westergren’s strong desire to return to an operating role.” Stifel, however, mainted a buy rating and price target of 16 on Pandora stock. In the company’s statement, Westergren said Pandora is “on the cusp of realizing an extraordinary vision: fundamentally changing the way listeners discover and enjoy music, and the way artists build and sustain their careers. We are pursuing a once-in-a-generation opportunity to create a massive, vibrant music marketplace. We have the audience, the technology infrastructure, the monetization engine and most importantly the right team with the passion and commitment to do it.” In other changes, Pandora CFO Mike Herring will now also serve as president, overseeing revenue, licensing, finance, legal and IT functions. Sara Clemens will now serve as Chief Operating Officer after previously serving as Chief Strategy Officer and will oversee Ticketfly, the live-event and ticket sales business that Pandora acquired last year to expand its offerings and take on rivals Apple Music and Spotify. Also, independent board member Jim Feuille takes over from Westergren as chairman. In the near term, Pandora will see higher content acquisition expenses, say analysts, following a ruling in December from the Copyright Royalty Board. This panel determines the rate to be paid to music labels and artists each time one of their songs is played on the Internet, under a statutory license for the period stretching from Jan. 1, 2016, to Dec. 31, 2020. Pandora on Thursday said it was expanding the size of its board from nine seats to 10, with the addition of Anthony Vinciquerra, He is a senior adviser with private equity firm TPG (formerly Texas Pacific Group), in its technology, media and telecom group. According to Dealreporter, Pandora is attracting buyout interest from such companies as Amazon.com, Alphabet ( GOOGL )-unit Google and Yahoo ( YHOO ). The New York Times reported in February that Pandora was “working with Morgan Stanley to meet potential buyers,” and has held talks about putting itself up for sale. Shares of Apple, Alphabet and Amazon were all down a fraction in midday trading Monday. Scalper1 News
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