Does Tidal's Deal With Sprint Leave Apple Eyeing Pandora?

Sprint CorpS
may have edged out
Apple Inc.AAPL
in forging a partnership with Tidal, a subscription-based music streaming service owned by Jay Z. With Tidal beyond its reach, Apple may now be forced to settle for
Pandora Media IncP
for beefing up its Apple Music service.

Deal Sealed

Sprint announced on Monday that it has entered into a partnership with Tidal, which would give its 45 million retail customers unlimited access to exclusive artist content.

The partnership deal also provides for Sprint acquiring a 33 percent stake in Tidal, with Sprint CEO Marcelo Claure joining Tidal's board. "Sprint shares our view of revolutionizing the creative industry to allow artists to connect directly with their fans and reach their fullest, shared potential," said Jay Z. "Marcelo understood our goal right away and together we are excited to bring Sprint's 45 million customers an unmatched entertainment experience."

Apple's Interest In Tidal

The announcement should come as a dampener for Apple, which was reportedly eyeing Tidal in a bid to compete against Sweden's Spotify. Apple Music's paid subscriber count stood at 20 million at the end of 2016, less than half that of Spotify.

When the Wall Street Journal reported of Apple's interest in Tidal in July 2016, Macquarie analyst Amy Yong had said it would motivate a strategic buyer to look at Pandora Media as a potential target.

Unsavory Overtures

In September last year, Kanye West, who was introduced as one of the apparent equity partners at Tidal's launch in October 2014, sent a series of tweets that amounted to prodding Apple to come to the negotiation table for a likely Tidal takeover. West tweeted, "Apple give Jay his check for Tidal now and stop trying to act like you Steve," suggesting efforts from both parties have not produced the desired effect.

Apple Turns Sights Toward Pandora?

With a Tidal takeover now a pipe dream, Apple may now be forced to look at Pandora Media, which according to estimates, has 4.3 million paid subscribers. Pandora is a music streaming and automated music recommendation service. The company is also working on plans to launch Pandora Premium, its on-demand streaming, with a subscription pricing of $9.99 per month and all the features that rivals Spotify and Apple Music offer.

Others Interested

When contacted by Benzinga in the wake of the Sprint-Tidal deal, Yong said wireless carriers are looking for a way to differentiate their network and one way is to get into content, including music and video. On the possibility of multiple parties other than Apple being interested in a Pandora Media buy and Monday's announcement from Sprint intensifying the interest, Yong said, "I think the most logical buyer for Pandora right now is Sirius XM Holdings Inc. SIRI, but clearly companies outside of music are looking to get into music. So, it's not just a horizontal M&A scenario that you're looking at."

Macquarie and its affiliates collectively and beneficially own or control 1 percent or more of any class of Pandora Media Inc's equity securities.

Posted In: Amy YongApple MusicJay ZKanye WestMacquarieMarcelo ClaureSpotifyTidalWall Street JournalAnalyst ColorNewsM&AAnalyst RatingsTechMediaTrading Ideas