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RAIN 6/3: Pandora sets IPO terms at $1.3 billion valuation

Posted on: 06/03/2011

PANDORA HOPES TO SELL 5MM SHARES AT $7-$9/SHARE

Updated coverage from yesterday’s RAIN News Flash.

Late yesterday various financial publications reported that Pandora had filed a proposal with the SEC outlining their intention to sell about 5 million shares in its upcoming IPO at an estimated price of between $7 and $9 a share. This would value the company at about $1.3 billion.

You can find coverage of the Oakland-based company in The New York Times, The Wall Street Journal, Washington Post, CNet, the San Jose Mercury News and the L.A. Times.

Kurt Hanson’s analysis from when the news first broke is below. You can also read Kurt’s updated new analysis in his blog to the right (and here).

RAIN ANALYSIS: This valuation is almost exactly as predicted in our “RAIN State of the Industry Address” as presented at RAIN Summit North in Toronto last March, RAIN Summit West in Las Vegas in April, and at the Radio Ink ConVergence conference in San Jose last month.

It’s consistent with the fact that Pandora’s current AQH audience is roughly equal in size to that of a 3.0-share FM radio station in every U.S. market — with all of those stations having audiences that have been growing recently at the rate of about 100% per year.

Pandora’s market capitalization at this share price would equal the total of the market caps of such pureplay radio broadcast companies as Entercom ($330 million), Cumulus ($180 million), Saga ($150 million), Radio One ($120 million), Emmis ($40 million), and several others combined.

Doing some estimates for the approximate market caps of the radio divisions of large media companies and for private companies, we believe this would make Pandora the nation’s fourth-highest-valued radio broadcaster, after Sirius XM, Clear Channel Radio, and CBS Radio. If Pandora’s stock price rises after the IPO, it could move to third place. — KH

RONNING AND LIPSET TO EXIT TARGETSPOT

Eric Ronning (pictured right) and Andy Lipset (below), whose digital rep firm Ronning Lipset Radio was purchased by TargetSpot in October 2008 creating the Internet radio industry’s largest ad rep company (see RAIN coverage here), are now leaving that company.

Inside Radio reports today that Lipset, TargetSpot chief revenue officer, will leave by the end of June. Ronning, an EVP of emerging media, will remain through the fall.

TargetSpot’s acquisition of Ronning Lipset Radio allowed it to aggregate and sell across properties like CBS Radio, Entercom, AOL Radio, and Yahoo, plus more than 1,000 other online stations representing more than 50 other radio groups and webcasters. Prior to co-founding Ronning Lipset Radio in 2003, Ronning had served as an Executive Director in ad sales at Yahoo! and Lipset had served as Director of Sales for AOL Music. Both also have experience at various divisions of Interep.

SONOS APPARENTLY DEVELOPING ALL-IN-ONE WIRELESS SPEAKER

Engadget reports on leaked details of the new Sonos Play:3, a box containing speaker drivers and dedicated amplifiers which wirelessly connects to a Sonos home entertainment network. Sonos makes multi-room home music systems, which happen to support several major Internet radio services. (RAIN coverage of Sonos’ S5 device is here and here.) Writes Engadget (here), “You’ll have to forgive us for wondering if Sonos has a wireless 5.1 home theater solution up its sleeve.”



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