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Sirius XM Radio Inc (SIRI), Apple Inc. (AAPL), or Google Inc (GOOG) Should Buy Pandora Media Inc (P)

Pandora Media Inc (NYSE:P) may be more popular than even it seems to think, and that may give Apple Inc. (NASDAQ:AAPL) something to think about as it readies its inevitable dive into streaming music.

An NPD Group Music Acquisition Monitor study of 7,600 consumers shows that Pandora and smaller rivals accounted for 23% of the time that young consumers between the ages of 13 to 35 spent listening to music during last year’s fourth quarter. That’s up nicely from the prior year’s 17% slice.

Pandora Media Inc (P)

Pandora Media Inc (NYSE:P) itself routinely publishes a similar metric. It claims that its listening hours during the same quarter accounted for 8% of total U.S. radio listening. A year earlier it claimed to serve up enough streaming content to grab 5.5% of the total U.S. radio listening market.

This suggests a few important things:

Pandora is growing faster than the Internet radio market as a whole.

Young people are really smitten by online streaming, painting an ugly picture of the future of terrestrial radio.

Someone’s going to have to buy Pandora Media Inc (NYSE:P) if it really wants to make a dent in this market.

That final point may seem debatable, but who wouldn’t want to buy Pandora? As unattractive as the model may seem given Pandora’s lack of consistent profitability, everyone seems anxious to jump into the fray.

Sirius XM Radio Inc (NASDAQ:SIRI) introduced personalized radio earlier this year. Several sources have been reporting for months that Google Inc (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL) are negotiating with record labels for licensing rights to roll out services of their own.

Why would they reinvent the wheel? Pandora Media Inc (NYSE:P) is growing faster than its less-seasoned challengers, and even if Google or Apple introduced an in-house service, it would still have to compete against the entrenched Pandora with more than 67 million unique monthly listeners.

Sirius XM Radio Inc (NASDAQ:SIRI) may make the least sense of the three potential suitors, but it has billions in net operating losses that it can use to offset future tax liabilities on profits. In other words, if it can get Pandora to be profitable — and it should, given its experience selling premium subscriptions — the tax break on the profits have it in a better competitive shape than Google Inc (NASDAQ:GOOG) or Apple Inc. (NASDAQ:AAPL).

However, Google and Apple have more to lose. If a rival grabs Pandora Media Inc (NYSE:P) it can ease back on developer support for the rival mobile operating system. Apps matter, and that may very well be the difference maker in someone deciding between an iPhone and an Android.

Google Inc (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL) also have more than enough money to make a deal happen.

Pandora won’t come cheap — especially now that it’s a market darling again — but sitting on the sidelines as Pandora gets bigger with every passing month will make a deal that much more expensive down the line.

The article Sirius XM, Apple, or Google Should Buy Pandora originally appeared on and is written by Rick Munarriz.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google.

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