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What happened

Pandora Media (NYSE:P) saw its stock spike in December when multiple news outlets reported it received an unsolicited buyout offer from SiriusXM (NASDAQ:SIRI) parent Liberty Media. That offer, even though it has not been accepted or rejected, sent the company's shares from $11.54 at market open on Dec. 1 to $13.04 when markets closed for the year, a 13% gain, according to data from S&P Global Market Intelligence.

So what

In July, Pandora rejected an informal offer from SiriusXM at $15 a share, CNBC reported. At the time, the company's board did not believe the offer was high enough and discussions ended.

While it's very early in the process and Pandora has not been actively shopping the company it appears to be willing to accept what its rival has to offer. That does not mean a deal will get done, and a source told CNBC that any negotiations were just "the first inning of the process."

Pandora call its new subscription service Pandora Premium. Image source: Pandora.

Now what

Pandora recently launched a subscription service that's similar to rival Spotify. That's a big change from the company, which has previously operated as a sort of personalized radio service.

If a deal is made, it's possible that Pandora would drop the new service because Liberty Media CEO Greg Maffei does not seem interested in that part of the business.

"We think that the free space, whether it be commercial terrestrial radio, or Pandora, is still a very attractive space," Maffei told CNBC. "And we talked about how we'd like to find a way to participate. I think the streaming business, which Pandora seems to have doubled down on, is a very unattractive business. So there are parts of Pandora that could be attractive. And there's parts that we'd have questions about."

Still, since that's a new space for Pandora and the vast majority of its business is ad-supported free use and low-cost subscriptions that let users drop the ads, it does seem like a deal would make sense. Without a partner or a bigger parent company Pandora Media risks becoming too small to compete -- a company offering a once-novel service that works best feeding into something else.

It's easy to see how the company could work as a free teaser service for SiriusXM's subscription properties. This deal makes sense and while it's very early, it seems likely that in 2017 something will happen.