Pandora may have stunned investors with last week's announcement that CEO Joe Kennedy would be stepping down after helping the company's board find a replacement, but it didn't take long for speculation to begin stirring about Mel Karmazin taking his place.
Billboard opined a day later that Pandora may be looking for a seasoned radio veteran to take Kennedy's place. A former radio exec argues that Karmazin would be a good fit.
"He is the smartest media executive I have ever known," he argues.
Several financial outlets and bloggers have been throwing their weight behind the former CBS and Sirius XM Radio chief to take the reins at Pandora.
It doesn't seem feasible.
Karmazin doesn't come cheap, and you have to remember that Pandora lost money in its latest fiscal year on the way to ringing up $427.1 million in revenue. Sirius XM was profitable on $3.4 billion in revenue.
Pandora won't have a problem finding a proven terrestrial vet to hop on the growing Pandora platform, but Karmazin is probably out of its price range.
Then again, does Pandora even need a radio veteran?
Pandora loves to compare its usage to the country's overall radio listenership -- it's not up 8% of total U.S. radio listening -- but it's not a radio company. It's a streaming music service with comedy as filler.
This isn't Sirius XM with $300 million a year to invest in programming and content. This isn't CBS with countless local AM and FM stations to nurture.
Sure, one can argue that at the end of the day Pandora is simply out to sell audio ads just like conventional radio. That's fair. Pandora's push to match Sirius XM and Spotify in premium subscription revenue isn't terrestrial fodder, though that's more ammo for Karmazin as the ideal CEO as the master of both.
However, Pandora is ultimately a technology company. It's no surprise that Pandora's biggest threats on the horizon are tech giants. Google is gearing up to launch a pair of branded digital music services through YouTube and Google Play. Reports continue to surface about Apple negotiating with its record label partners for attractive streaming royalty rates.
Pandora doesn't need someone to pit Pandora against CBS Radio and other terrestrial offerings. Pandora's already winning that bout. Sirius XM has been a Wall Street winner over the past four years, but Pandora is also growing a lot faster -- in revenue and users -- than Sirius XM.
Pandora needs a tech visionary at the helm. The real battle will be about technology as companies jockey for the best apps and auto dashboard integration. Karmazin would turn heads, but he's not necessarily the leader that Pandora needs right now.
P is for Pandora
Pandora has won millions of devotees among music fans but few supporters on Wall Street. The online jukebox seems to be redefining the way we consume music, a transformation that's only likely to grow. But high royalty rates and competition from all corners threatens to silence the company. Can Pandora translate success with its listeners into a prosperous business model that will deliver for investors? Learn about the key opportunities and potential pitfalls facing the upstart radio streamer in The Motley Fool's new premium research report. All you have to do is click here now to subscribe to this invaluable investor's resource.
The article Why Would Mel Karmazin Go to Pandora? originally appeared on Fool.com.
Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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