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RAIN 1/14: Pandora reportedly planning $100 million IPO

Posted on: 01/14/2011

WEBCASTER COULD CHOOSE LEAD UNDERWRITER TODAY

CNBC reports that Pandora held a meeting with Wall Street underwriters on Tuesday. This sort of meeting, known as a “bakeoff,” is seen as an initial step towards going public. Pandora is reportedly considering an IPO of approximately $100 million and may choose a lead underwriter as soon as today.

Pandora declined to comment on the story to CNBC (here), Forbes (here) and Retuers (here).

This isn’t the first we’ve heard about Pandora going public. The New York Times reported in March 2010 (in a story that made the newspaper’s front page), that investment bankers were not only “courting” Tim Westergren, but said Pandora could go public (RAIN coverage here).

Tom Taylor of Radio-Info notes (here) that an IPO could make Pandora more competitive with satellite radio, could allow the webcaster to expand beyond music programming and of course would bolster an already healthy offering of in-car offerings.

BUT WAIT, ASKS DMN, CAN PANDORAEVEN SURVIVE LONG-TERM?”

Pandora’s audience doubled to 75 million in 2010, Digital Music News reports, and now boasts a library of over 850,000 songs. But that probably means a “doubled payout obligation to SoundExchange,” if not more due to “increased tuning hours.”

Pointing to the fact that royalty costs consumed 56% of Pandora’s $50 million revenues in 2009, Digital Music News asks (here), “Is this a business model that can scale, or even survive long term?

Analysts do expect Pandora’s revenues to double to $100 million this year (RAIN coverage here). Meaning, if royalty costs also double as DMN predicts, Pandora will still pay around 56% of revenues to royalties.

FRENCH KIDS BALK AT OLD TECH, MAKE YOU FEEL OLD

Here’s a bit of nostaglic fun to close out the week: a YouTube video of French school-kids trying to identify old technology, from radios to turntables to Game Boys. Enjoy!



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