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Pandora CEO stepping down as Apple, Spotify rivalry heats up
[SAO PAULO] Pandora Media Inc, the online radio service that sold a stake in itself to Sirius XM Holdings Inc earlier this month, said founder Tim Westergren will step down as chief executive officer as part of a handful of management changes.
Chief Financial Officer Naveen Chopra has been named interim CEO while the board begins a search for a permanent replacement, Oakland, California-based Pandora said Tuesday in a statement. It named Jason Hirschhorn, a former co-president of Myspace Inc and former chief digital officer at MTV Networks, to its board to fill a recently vacated seat. Pandora President Mike Herring and Chief Marketing Officer Nick Bartle are also leaving the company, it said.
"Over the past several weeks, the board has taken a number of steps to refocus and reinforce Pandora," board member Roger Faxon said in the statement. "As listeners continue to move from traditional terrestrial radio to more dynamic and flexible offerings, it is the board's belief that the transition continues to present a massive opportunity and that Pandora is in an ideal position to capture an increasing share of this audience."
A former musician, Mr Westergren, 51, co-founded the company and served as CEO in its early days. He returned as CEO in March 2016 due to displeasure with his predecessor, Brian McAndrews, as the company struggled to keep up with new rivals.
While Mr McAndrews was faulted by many employees for a lack of vision and leadership, the company's fortunes haven't improved much under Mr Westergren. The stock has taken a beating and its biggest new initiative - an on-demand service like those offered by Spotify and Apple - arrived late. The future of that service is unclear now that Sirius has come aboard.
"Profitability is going to be a really big focus for the new management team," said Amy Yong, an analyst at Macquarie Capital USA in New York. "These are changes that people have been waiting for."
In a statement, Mr Westergren touted his accomplishments since returning as CEO, saying he rebuilt Pandora's relationships with the music industry, introduced the on-demand service and brought more technology to the company's advertising.
"With these in place, plus a strengthened balance sheet, I believe Pandora is perfectly poised for its next chapter," Mr Westergren said.
Pandora announced June 9 that it had agreed to sell a 19 per cent stake to Sirius, the satellite-radio provider. In a separate transaction to improve its cash balance, Pandora also said it sold the concert-ticketing business Ticketfly for US$200 million. The deals gave Pandora a cash injection as the company adjusts to the changing landscape in the music industry, where on-demand downloading services like Spotify Ltd are gaining in popularity.
Pandora has struggled to contend with the fast growth of Spotify and Apple Music, along with the billions of dollars Amazon.com Inc and Google are investing in music. While Pandora has diversified into ticketing and artist services, investors such as hedge fund Corvex Management LP have questioned that strategy and urged a possible sale because of losses and a tumbling stock price.
Shares of Pandora had rebounded in recent days amid speculation Westergren was planning to step down. The stock surged 21 per cent in the five trading sessions through Monday's close. Its shares were down 1.5 per cent to US$8.33 at 10am New York time.
A new CEO will enable Pandora to focus on the advertising that makes the service unique compared with competitors like Apple or Spotify, said John Tinker, an analyst at Gabelli & Co in Rye, New York.
"There's a large audience out there who will never pay, but they are happy to listen so go after them," he said. "The CEO stepping down is going to enable Sirius/Liberty to bring in a candidate who is more focused on selling advertising."