Satellite radio company Sirius XM Holdings, whose subscription service is offered by most automakers in the US, is to buy online music service Pandora Media in a US$3.5bn all-share deal that observers said would help it battle growing competition from streaming rivals Spotify and Apple Music.

Reuters noted Sirius XM, controlled by Liberty Media, has built its name supplying more than 175 channels to car drivers but has largely trailed Pandora, Spotify and Apple in mobile and streaming content.

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Analysts told the news agency the two businesses were largely complementary.

"Sirius cannot offer on-demand radio, and cannot offer customisation, and Pandora offers both," said Michael Pachter, an analyst with Wedbush Securities in Los Angeles.

"Sirius can merge Pandora's radio business into its satellite subscription business, and can also begin to offer on-demand to its large installed base of satellite subscribers."

Sirius XM CEO James Meyer said on a conference call that the company had been in talks with Pandora even before its CEO Roger Lynch took up the position in August last year.

"We had a conversation 15 months ago. We couldn't reach an agreement on value quite honestly," Meyer said.

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