Pandora's new tune: Selling itself?

Internet radio giant Pandora may be looking to switch channels.

The music-streaming service has held talks about selling the company and is working with Morgan Stanley to line up potential buyers, sources tell The New York Times. Talks are said to be in a preliminary stage and may not lead to a sale, the Times' unidentified sources said.

Pandora declined to comment on the report.

The talks would suggest that Pandora, the Internet's largest streaming-music service, is feeling the pinch as listeners move toward rivals such as Spotify and Apple Music, which allow on-demand listening to specific tracks. Pandora said Thursday that it counted 81.1 million active users at the end of the fourth quarter, down from 81.5 million a year ago.

That slight backward step comes as streaming music has exploded in popularity, with the number of on-demand streams in the US nearly doubling last year, according to researcher Nielsen's year-end music report. Fans logged nearly 145 billion audio streams in 2015, up 79 percent from the previous year, the researcher found.

Meanwhile, competitors are encroaching on the turf of 16-year-old Pandora. Spotify said in June that it had 75 million active users worldwide, up from 50 million the previous November. Apple Music reportedly reached the 10 million paying-customer mark in January, just six months after it launched, a milestone that Spotify took nearly six years to reach.

To battle back, Pandora has been working to broaden its offerings. In November, it announced plans to buy assets of smaller streaming rival Rdio, a move that will let it roll out new services that include playing the exact tune that you want. The acquisition of TicketFly, meanwhile, is meant to help people find out about concerts in their area.

Still, Pandora has struggled to turn the fertile streaming market into profits. The Oakland, California-based company on Thursday posted diluted earnings per share of 4 cents on revenue of $336 million. Revenue was up from the $268 million in sales the company recorded in the fourth quarter of 2014, but its earnings per share declined dramatically from the 18 cents in the year-ago quarter. Thomson Reuters' consensus estimate pegged earnings per share at 7 cents.

The company's recent performance has done little to impress investors, who have pushed down the value of Pandora's shares nearly 60 percent in a little more than three months. Pandora's stock closed Thursday at $9.09, up 69 cents, or 8.2 percent, after the Times' report was published. But the shine of sale talk wasn't enough to keep investors' interest, and the stock declined 5.8 percent in after-hours trading.