SiriusXM anticipates taking a $1 billion impairment charge on Pandora due to rising royalty costs and the streaming platform's operating performance. The announcement came ahead of the company's Q4 2020 earnings call.

The impairment charge reflects challenges with Pandora's royalty cost structure and its anticipated operating performance. Despite this setback, SiriusXM reported strong overall performance metrics:

• Added 900,000+ net self-pay subscribers, reaching 30.9 million total
• Expected to meet or exceed 2020 revenue guidance
• Projects 800,000 new subscribers in 2021
• Forecasts $8.35 billion revenue and $1.6 billion free cash flow for 2021

New CEO Jennifer Witz remains optimistic about growth prospects, highlighting recent strategic moves:

• Acquisition of podcast platform Stitcher ($325 million)
• New deal with Howard Stern
• Expanded NBA broadcasting agreement
• Exclusive audio rights for 2021 Masters Tournament

SiriusXM stock (SIRI) responded negatively to the news, dropping from $6.37 to $5.94 per share, its lowest since early January 2021. However, the company's diversification into sports broadcasting and podcasting demonstrates efforts to maintain growth despite Pandora's challenges.

This development signals the ongoing impact of streaming royalty rates on digital music platforms and the importance of diversifying revenue streams in the modern audio entertainment landscape.

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