Sirius XM Holdings (NASDAQ:SIRI) has been interested in Pandora Media (NYSE:P) for a while now, and recently took a $480 million stake in the company when Pandora turned down an acquisition offer.

In this clip from Industry Focus: Tech, Motley Fool analyst Dylan Lewis and senior tech specialist Evan Niu explain what Sirius is getting out of its interest in Pandora.

A full transcript follows the video.

This video was recorded on June 30, 2017.

Dylan Lewis: Why don't we kick things off with Pandora? A lot has happened with the company in the last month or so. In early June, they announced that Sirius was taking a $480 million stake in the business, and that the company was selling off its Ticketfly online ticket property. Why don't we unpack that first part there? It looks like Sirius is taking what amounts to about a 19% stake in the business. For longest time, there's been this "will they, won't they" with these two companies. They've talked about possibly doing an acquisition, there's been rumors for a while. This is not a full acquisition. But it gives Sirius a meaningful stake in the business, and three seats on Pandora's board. In your eyes, Evan, what makes Pandora attractive to Sirius?

Evan Niu: One of the main factors is the fact that Sirius is still very reliant on the automotive market. No one listens to satellite radio outside of the car. It's based in a stand-alone device, and no one really does that anymore. So, they are still very tied to the auto market. And that's under threat by the fact that cars are becoming increasingly connected to a wider array of music options. So, if you're tied to this market, and that's your only real market, and it's getting a lot more competitive there, then you have to start exploring other avenues. For them, it's a way to get exposure to internet radio, just more digital radio services. They also lack an on-demand service, which is something that Pandora is just now finally getting up and running. So, to me, I think that's part of it.

Lewis: A lot of people think of Pandora as a laggard in the online music-streaming space, but they do have something like 70 million users. They certainly have a large installed base to pick up on and work off of, if you're Sirius.

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