Tue, May 19, 12:58 PM
- Next Big Sound provides music labels, artists, and advertisers/brands with data and tools for analyzing online music consumption and the impact of factors such as social media activity, ad campaigns, and promotional events. The company was founded in 2009, and has raised less than $10M.
- Pandora (P +0.2%) is acquiring Next Big Sound for an undisclosed sum. It declares Next Big's offerings will complement Pandora's Artist Marketing Platform, which provides artists with data on listener activity, and tools for engaging with fans.
- Pandora: "Pandora's data reflects insights from nearly 80 million monthly active users who have provided more than 50 billion thumbs on tracks played. Added to Next Big Sound's current insights, the data set powered by both companies will deliver an unprecedented trove of information to the music industry ... The acquisition will also benefit brands that advertise with Pandora by delivering access to insights that can help them identify artists to partner with and measure the reach and impact they achieve through those partnerships."
Fri, May 15, 11:21 AM
- Pandora (P -3.1%) has sold off after a New York rate court ruled in favor of music publishing rights group BMI in a dispute over performance royalties. The ruling stands to increase Pandora's royalty payments to BMI to 2.5% of revenue from 1.75%.
- Of note: Pandora plans to appeal the verdict to a court that recently allowed the company to maintain its current 1.85% royalty rate with publishing rights group ASCAP. Various publishers have sought to withdraw their content from BMI/ASCAP deals in favor directly negotiating with Pandora and other Web streaming services.
- Altogether, content acquisition costs equaled 54.6% of Pandora's Q1 revenue - recording royalties paid to SoundExchange accounted for a large chunk of the payout. The company was recently cleared by the FCC to buy a Rapid City, SD radio station, a move aimed at lowering Pandora's payments to BMI/ASCAP by allowing it to obtain the rates enjoyed by station-owning rivals.
Mon, May 4, 6:42 PM
- The FCC has ruled to give Pandora Media (P +3.2%) the foreign-ownership waiver it needs to complete a $600K purchase for South Dakota radio station KXMZ-FM -- and thus lower its royalty bills.
- The waiver means Pandora can exceed the 25% foreign-ownership threshold that would otherwise prevent the sale. The FCC said it would "serve the public interest to permit a widely dispersed group of shareholders to hold aggregate foreign ownership in Pandora Media in excess of the 25 percent benchmark."
- Performance-right organizations were opposed to the move; Pandora pays ASCAP 1.85% of revenue and BMI 1.75%, which would have meant $33M last year.
- Previously: Bloomberg: FCC to pave way for Pandora to buy radio station (Apr. 27 2015)
Mon, Apr. 27, 11:40 PM
- Bloomberg reports FCC chairman Tom Wheeler has asked fellow commission members to give Pandora (NYSE:P) a foreign-ownership stake waiver that would pave the way for it to buy a Rapid City, SD radio station for $600K, and in doing so pay lower performance royalties to trade groups such as ASCAP and BMI.
- Pandora originally struck a deal to buy the radio station in 2013. ASCAP accuses Pandora to trying to create a loophole. Pandora argues it's only seeking to enjoy the same rates paid by station-owning rivals such as Clear Channel and CBS.
- Though not inconsequential, performance royalties are a much smaller expense for Pandora than recording royalties paid to SoundExchange. The company's content acquisition costs rose 16% Y/Y in Q1 to $126M, and equaled 54.6% of revenue vs. 55.7% a year ago.
Thu, Apr. 23, 4:24 PM
- Pandora Media (NYSE:P) has slipped 5.1% after hours despite a Q1 earnings beat, as it guides low on EBITDA for the second quarter.
- Adjusted EBITDA was -$20.9M, up 7% Y/Y and beating an expected -$30.8M.
- Revenue breakout: Advertising revenue of $178.7M (up 27%); subscription and other revenue, $52M (up 32%). Total mobile revenue came to $181.1M, up 35% on a non-GAAP basis.
- Listener hours grew to 5.3B, up 11% Y/Y. Active listeners were up to 79.2M from the prior year's 75.3M.
- The company's updated guidance to suggest Q2 revenue of $280M-$285M (on the high side of expected $280.3M), but EBITDA of $8M-$13M vs. an consensus of $14.6M. For full 2015, the company's expecting revenue of $1.16B-$1.18B (vs. consensus $1.16B) and adjusted EBITDA of $75M-$85M (vs. expected $76.7M).
- Pandora ended Q1 with $481.3M in cash and equivalents, up from Q4's $458.8M. Cash from operating activities was $27M.
- Conference call at 5 p.m. ET.
- Press release
Thu, Apr. 23, 4:02 PM
Wed, Apr. 22, 5:35 PM
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Tue, Apr. 14, 8:07 PM
- For the first time, revenue from music downloads/subscriptions passed CD sales in 2014, according to a new trade group report.
- The International Federation of the Phonographic Industry reports that while overall sales were steady worldwide at about $15B, CD/physical formats slipped 8% to $6.82B, vs. digital revenue that grew 7% to $6.85B. The remainder of sales came from licensing/radio play.
- Streaming services (including Spotify, Pandora (NYSE:P), and Apple's Beats Music) showed strong growth in 2014, with revenues that grew a combined 39% Y/Y. The services now make up 32% of digital revenue (23% of digital revenue from subscription services, 9% from ad-supported streaming).
- The music industry "big three": Universal Music Group (OTCPK:VIVHY), Sony Music Entertainment (NYSE:SNE), Warner Music Group (private)
Mon, Apr. 13, 9:15 AM
Fri, Apr. 10, 8:06 PM
- With news that Spotify is close to a new funding round of $400M, Pandora Media (NYSE:P) rose 5.3% after hours on what investors are taking as positive valuation news.
- If completed as reported, Spotify's round values the company at $8.4B, more than twice the market cap of Pandora ($3.5B).
- How do the companies compare beyond that? Spotify earned more revenue in 2014 ($1.3B, vs. Pandora's $920.8M).
- Pandora said at year's end it had 81.5M active listeners. Around the same time, Spotify said it had about 45M free users and 15M paid subscribers ($9.99/month for no ads).
- Any valuation data points may be helpful for Pandora, as many analysts consider upcoming royalty-rate rulings a risky overhang for the stock.
- Previously: SunTrust weighs in on Pandora's rights fights (Apr. 09 2015)
- Previously: Axiom launches Pandora Media at Hold, citing heavy song-rate risk (Apr. 06 2015)
- Previously: Pandora up 3.4% as Miller notes 'monstrous discount' (Mar. 27 2015)
- Previously: Pandora up 2.9% as CRT Capital upgrades to Buy (Mar. 18 2015)
Fri, Apr. 10, 5:27 PM
- Spotify's close to a deal on a seventh funding round, which would raise $400M and value the service at $8.4B, The Wall Street Journal reports -- launching it into rarefied air. There's still no timeline for an IPO.
- An $8B valuation means investors place it at more than twice the worth of key competition Pandora Media (NYSE:P). Spotify was valued at $4B-$5B last summer and fall.
- Like Pandora, Spotify is losing money and needs cash to support heavy royalty payments. Spotify's minority ownership of record companies -- including Universal Music Group (OTCPK:VIVHY), Sony Music Entertainment (NYSE:SNE) and Warner Music Group -- have pressed for higher conversion of free users to paying subscribers.
- Along with Pandora, Spotify faces intensifying competition with likely new entries from Apple and Google, along with Jay-Z's high-bitrate service Tidal.
- Manhattan Ventures Partners places Spotify's 2014 revenue at $1.3B, vs. Pandora's $920.8M.
Thu, Apr. 9, 12:03 PM
- SunTrust analysts say it's "extremely premature" to draw conclusions about headlines that "appear negative" for Pandora Media (P -1.7%), as the Justice Department discusses the details around music performance rights.
- At issue is music publishers trying to pull works from performance-rights organizations like ASCAP and BMI, in order to get a higher-than-statutory rate directly from Pandora.
- A pair of judges' rulings have left the issues largely unresolved, Bob Peck and Matthew Thornton write. One factor is whether publishers can license works to some providers at the statutory rate and negotiate a different rate directly.
- The analysts say further discussion could benefit from more transparency from the PROs and labels over ownership, as well as more notice over withdrawing from PROs.
- SunTrust rates Pandora stock as a Buy.
Mon, Apr. 6, 3:57 PM
- Pandora Media (P +0.3%) rebounded from a soft open to move into positive ground today, while Axiom Capital launched coverage of the company at Hold.
- Axiom's Victor Anthony set a $17 price target. Shares are trading at $16.26.
- Anthony pointed to risks from competition as well as the continuing overhang of the Copyright Review Board rate decision, which will set costs per play and might have a wide range of impacts to Pandora's costs: "We currently model the per-song fee to increase to $0.0015, in 2016, from $0.0014 in 2015, +7% YoY."
- Those pieces of pennies add up: Anthony points to "meaningful risk" owning the stock into the CRB decision, noting the extreme variance between Pandora's proposal vs. the SoundExchange proposal on behalf of publishers, labels and artists.
- Pandora's offering of a $0.0004 decrease would boost its non-GAAP 2016 EPS by 126%, to $0.99, while the "rather draconian" proposal from SoundExchange of a wholesale $0.0011 increase would knock Pandora's 2016 EPS to -$0.69, a difference of -257%.
Fri, Mar. 27, 2:25 PM
- Pandora Media (NYSE:P) -- down 1.5% during lunch hour -- jumped back into positive ground, now up 3.4%, as LMM's bullish Bill Miller tells CNBC the stock trades at a "monstrous discount to what it would be valued at if it were privately held."
- While Spotify is recently valued around $10B, he points to Pandora as a profitable company with a $3.3B market cap and expects the company to grow earnings at 100% annually over the next three years.
- "It has 88M listeners, and it streams more music than YouTube does video," Miller says.
- He notes Pandora sold down as user growth slowed but "that picked up again in the quarter." They're probably going to lose some market share to possible competition from Spotify and Apple, but he believes Pandora's lead is sustainable.
Wed, Mar. 18, 9:57 AM
- Pandora Media (NYSE:P) is up 2.9% as CRT Capital upgrades the shares to Buy from Fair Value, on expectations that royalty rate talk would end up favorable for the streaming music firm.
- Pandora paid a record $439M to rights owners last year. In dealing with the Copyright Royalty Board, the company reports that it pays $10,000 or more a year to 2,000 artists, and $50,000/year or more to more than 800 artists.
- The analysts raised Pandora's price target to $22, from $16. Shares are currently trading at $16.18.
Mon, Mar. 16, 3:18 PM
- Pandora (P -4.7%) has returned to earth after Friday's gossip-fueled 7.3% gain.
- Unsourced rumors that someone (again) was going to come buy the company went nowhere (so far ...): Jay-Z, who was subject to chatter about swooping in with a Pandora buy, had his bid for Sweden's Aspiro (parent of high-quality streaming services Tidal and WiMP) accepted late last week, though hope may have sprung eternal for those counting on a buyout.
- Updated 7:18 p.m.: Pandora closed today -5.3%, and is down another 0.1% after hours.
- Previously: Dougherty analyst: Pandora takeover rumor 'doesn't make any sense' (Mar. 13 2015)
- Previously: Pandora cruising, +8.9% on takeover chatter (Mar. 13 2015)
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