Satellite radio provider SiriusXM said today that it would acquire music streaming service Pandora Media for $3.5 billion in a bid to corral listeners who do not want to pay for premium channels.

Pandora rose to success with radio stations tailored to users that were sprinkled with ads. In recent years it has struggled to compete with rival services like Spotify and Apple Music, which dominated music streaming by offering paid on-demand content — something Pandora was slow to replicate.

SiriusXM, one of the first commercial enterprises to sell radio service through satellite systems, has been partly hampered by the high capital costs of its business. Acquiring Pandora would give SiriusXM access to the fast-growing online segment of listeners, those who prefer streaming music through mobile phones. Fewer people are listening to traditional programming, whether over terrestrial or satellite radio.

“It would allow Sirius to reach a much broader audience,” said Justin Patterson, a music industry analyst. He likened the situation to DirecTV, the satellite service owned by AT&T, which also sells a streaming version of its product known as DirecTV Now. The online package is cheaper than the satellite offering and has the potential to reach many more households through existing broadband connections.

Pandora has been a potential acquisition target for at least two years: In 2016, a continued slide in its share price prompted it to look for possible buyers and SiriusXM has been in the running to buy Pandora since it injected $480 million of funding into the company last year.

The investment allowed Pandora to cover basic expenses and also spurred a shake-up in the executive ranks that brought in Roger Lynch, Pandora’s fourth chief executive in four years.

On a call with analysts, Jim Meyer, SiriusXM’s chief executive, said the acquisition would enable Sirius to try to keep listeners who did not want to pay for music by diverting them toward Pandora’s free ad-based model.

“The truth is the majority of ‘trial-ers’ ultimately decide not to pay for our service,” Meyer said. “As I’ve said many times, we would benefit from having a free funnel.”

SiriusXM has 36 million subscribers across North America and more than 23 million listeners on trials. The companies said that combined with the 70 million monthly active users on Pandora, this would create the largest digital audio audience in the United States.

The $3.5 billion offer is a steep valuation given Pandora’s losses. The company is expected to post a loss of $150 million this year and about $83 million next year.

Pandora does stand to benefit from the potential passage of a bill that would make it easier for publishers and artists to earn royalties while also protecting streaming services from lawsuits.

The bill, known as the Music Modernization Act, is meant to correct the flaws and loopholes that have led musicians to complain about unfair compensation from streaming services. The legislation, which Sirius XM has opposed, passed the Senate last week.

SiriusXM’s deal for Pandora allows other potential bidders to emerge in what is known as a go-shop period when the company could attract other buyers. Rivals like Spotify or big tech players like Amazon could come in with a spoiler bid, but Patterson said he expected Sirius to ultimately close the deal. “There’s a high probability this goes through,” he said.

SiriusXM, which is controlled by Liberty Media, announced that it was buying Pandora in an all-stock transaction. Shares of Pandora jumped in early trading today, but ended the day down about 1 percent.

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