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RAIN NEWS FLASH: Pandora boosts IPO terms; valuation increases 36% to around $1.7 billion
·Jun 10, 04:20 AM
Posted by: Michael Schmitt

WEBCASTER TO OFFER ADDITIONAL 1M SHARES AT INCREASED PRICE

Pandora has increased its expected IPO terms, according to a new S-1 filing, to a proposed offering of 6 million shares at an estimated price of $10-12 each. That would give the company a new valuation of around $1.6 to $1.9 billion.

Earlier this month, Pandora proposed selling 5 million shares at $7 to $9 per share. That put the company’s valuation at around $1.3 billion. You can find RAIN’s earlier coverage here and analysis from RAIN publisher Kurt Hanson here.

The new terms increase share offerings by 20%, ups the price per share 33-43% and raises their approximate valuation by around 36%.

Various news reports indicate an expectation that the IPO will occur on or about next Wednesday, June 15th.

You can find more coverage from the Wall Street Journal (here) and Forbes (here).

RAIN ANALYSIS: As noted in the analysis “here“:http://textpattern.kurthanson.com/kurtsblog/1235/late-night-addendum-to-the-pandora-analysis-at-left, this valuation would rank Pandora as the country’s fifth-most-valuable radio broadcast group based on enterprise value, behind Sirius XM, Clear Channel, CBS Radio, and the upcoming Cumulus-Citadel combination — although now, if its price pops on the opening day of trading, it could theoretically leapfrog into position #4.

For a new comparison, let’s talk a look at audience size. Again, this valuation for Pandora seems reasonably appropriate.

Based on recent trends in Triton Digital’s Webcast Metrics rankers, Pandora probably has a domestic AQH (Mon.-Sun. 6a-12m) today of about 700,000 listeners, which probably, according to my calculations, puts it approximately tied with Entercom for sixth place among radio broadcast groups.

That’s significantly behind the AQH of the Cumulus-Citadel combination… but the compensating factor is that Pandora’s audience has been growing at the rate of about 100% per year, which is of course not true of any of the other major radio broadcast companies.

Consumers will continue to move to Internet-delivered radio for their music-listening needs just as they moved in the ’70s to FM, for the exact same reason — because it’s a technically-superior delivery mechanism. (As FM delivery of music radio allowed more variety and stereo, Internet delivery of music radio allows even more variety and personalization — e.g., a “skip” button.)

As consumers do, Pandora is in a superb position to capture a large percentage (not 100%, of course, but a large percentage) of that new listening. — KH



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