(Bloomberg) -- Pandora Media Inc. founder Tim Westergren is stepping down as chief executive officer amid growing losses and discontent over the online radio company’s strategy to combat the rising popularity of on-demand services like Spotify.
Chief Financial Officer Naveen Chopra was named interim CEO while the board begins a search for a permanent replacement, Oakland, California-based Pandora said Tuesday in a statement. Pandora, which sold a stake to Sirius XM Holdings Inc. earlier this month, also announced other management changes and departures.
A former musician, Westergren, 51, co-founded the company and served as CEO in its early days. He returned in March 2016 due to displeasure with his predecessor, Brian McAndrews, as the company struggled to keep up with new rivals. While McAndrews was faulted by many employees for a lack of vision and leadership, the company’s fortunes haven’t improved much under 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.”
Pandora also named Jason Hirschhorn, a former co-president of MySpace and former chief digital officer at MTV Networks, to fill a recently vacated board seat. President Mike Herring and Chief Marketing Officer Nick Bartle are leaving, the company 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.”
In a statement, 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,” Westergren said.
Pandora announced June 9 it agreed to sell a 19 percent stake to Sirius, the satellite-radio provider controlled by cable TV billionaire John Malone’s Liberty Media Corp. In a separate transaction to improve its cash balance, Pandora also said it sold the concert-ticketing business Ticketfly for $200 million. The deals gave Pandora a cash injection as the company adjusts to the changing landscape in the music industry.
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 after Recode reported Westergren was planning to step down. The stock surged 22 percent in the five trading sessions through Monday’s close. The stock fell 0.8 percent to $8.40 at 12:01 p.m. in New York.
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.”