Radio stocks have been generating some extra attention recently. This was led by Sirius XM Holdings (SIRI 0.98%), which received a buyout offer from Liberty Media (FWONA) (which is already a majority owner in the company).

Also of interest was the announcement by Pandora Media (P) that it would launching a new in-car advertising service in January. CC Media Holdings' (NASDAQOTH: CCMO) unit Clear Channel Media and Entertainment said that its iHeartRadio digital platform will now be included in Kia, Jaguar Land Rover, and Volvo vehicles as well.

iHeartRadio digital platform
New systems installed in vehicles will provide growth opportunities for Clear Channel Media and Entertainment, offering potential listeners over 1,500 live radio stations from its service. Volvo vehicles are now outfitted with Sensus Connect, Jaguar Land Rover vehicles with Bosch SoftTec's InControl Apps platform, and Kia vehicles with UVO.

With the addition of iHeartRadio Talk, listeners will be able to access on-demand entertainment, talk, and news content. This should attract more users, which would generate revenue from the additional ads being listened to.  

Pandora's new advertising service
In January, Pandora will begin offering an in-car advertising service. It has already gained some respectability via its landing of the national brands Ford and Taco Bell. Marketers will be able to run 15- and 30-second audio spots on 130 different models.

Over the last six months, shares of Pandora have climbed about 38% as listening hours have jumped 13% year-over-year to 1.58 billion. The company reported that its number of active listeners has increased to 76.2 million, also gaining 13% over last year during the same period. Its U.S. radio market share rose to 8.6% in December, up from 7.6% in December 2012.

Pandora is still losing money, however, and will have to both lower costs and boost its per-unit ad revenue in order to turn profitable.

Liberty Media's Sirius XM offer
The big story in radio is of course the decision by majority owner Liberty Media to acquire the remaining shares of Sirius XM. In anticipation of a probable higher offer, shares of Sirius have been climbing.

According to Liberty CEO Greg Maffei, the reason for the offer is to tap into the cash of Sirus XM in order to finance other deals. Total cash for the company as of the most recent quarter is $720.47 million, with operating cash flow (trailing twelve months) of $1.04 billion.

The immediate significance of a deal will probably be an attempt by Liberty to acquire Time Warner Cable (NYSE: TWC) via Charter Communications (CHTR 2.04%), which is another of Liberty's holdings. Liberty Media acquired a 27.3% stake in Charter in the early part of 2013.

Time Warner Cable has continued to struggle after its battle with CBS over retransmission fees. Time Warner Cable had to capitulate when the fall sports season arrived, publicly weakening the company and its leadership.

An attractive element of Time Warner Cable is that it has a large footprint and no significant shareholder that could or would potentially disrupt the deal

On Charter Communication's side, it has little in the way of major competition from satellite and cable providers in the markets it serves. This provides it some cushion if it decides to go after Time Warner Cable.

There are concerns about the company's debt level and resultant interest expense, though. Macquarie believes that Charter would have to raise about $25 billion to bid for Time Warner Cable, which would add approximately $200 million in interest expenses for the new combined company.

Outlook
It's very interesting to see Sirius XM being considered a cash cow for use in financing other acquisitions. If Liberty Media does go ahead and acquire Sirius XM, it does point to concerns of taking the eye of the company's business and looking to it primarily as a bank.

Pandora Media and Clear Channel, on the other hand, continue to focus on growth. This is a result of both needing economies of scale to lower costs and boost per-unit ad revenue.

The crowded digital radio space continues to grow. Until there is some significant consolidation, I would be cautious about putting a lot of money into these radio stocks. Pandora has some potential, but I would like to see it gain market share before committing to it.