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RAIN 6/10: Pandora boosts IPO terms; valuation increases 36% to as much as $1.9 billion

Posted on: 06/10/2011


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, this valuation would (still) rank Pandora as the country’s fifth-most-valuable radio broadcast group based on enterprise value, behind Sirius XM, Clear Channel Radio, CBS Radio, and the upcoming Cumulus-Citadel combination — although now, if Pandora’s price pops on the opening day of trading, it could potentially leapfrog into position #4.

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

Based on recent trends in Triton Digital’s Webcast Metrics rankers, plus factoring in some Pandora listening that Webcast Metrics doesn’t measure, I believe Pandora has a domestic AQH (Mon.-Sun. 6a-12m) today of about 800,000 listeners, which, according to my calculations, puts it approximately tied with Entercom for fifth 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 for music. As FM delivery of music radio allowed more variety and stereo, Internet delivery of music radio allows even more variety and personalization.

(Similarly, both FM in the ’70s and Internet radio today debuted with lower spot loads and less DJ chatter than the previous-generation music radio product.)

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


Turntable.fm is a new music service based on collaborative listening, where DJs play music for other users who can then chat, vote and generally interact with the DJs and one another.

The site turns music “into a social game of sorts,” writes Eliot Van Buskirk at Evolver.fm.

DJs choose music from their own library or from Turntable.fm’s collection. The listeners get to vote and if enough folks hate the song, it gets killed. Van Buskirk has much more coverage of the new, headline-grabbing site here.


WTOP-FM/Washington, D.C. and and WTOP.com reporter Neal Augenstein says he’s the “first major-market radio reporter to do all of his field production on an iPhone,” and he’s published a list of his five must-have apps for his job.

“Using the iPhone 4, I can deliver audio, video, photos and copy for on-air, online, and social networking platforms from a single device,” he writes in PBS.org’s MediaShift blog. “The key is the apps… For 12 bucks, a radio reporter can have the tools to keep several editors happy, and more importantly, several audiences informed.”

Find out Augenstein’s five must-have apps in MediaShift here. And he’s written more on his shift to solely using the iPhone 4 for his reporting here.


Smartphones are a key component to Internet radio’s future, but Net radio and other streaming apps often quickly drain phone batteries. A team from AT&T is researching how to make more energy-aware apps and they’re using Pandora as a test subject.

Connecting to a 3G network is particularly tough on the battery, so researchers have come up with a tool that makes apps only establish a “full power connection” when they really need it. Otherwise the apps use an “intermediate state” which consumes half the power.

Network World has more on the new research here.

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