Why Is Pandora Trying to Buy a Radio Station in South Dakota?
Pandora is trying to get into the traditional FM radio business -- sort of.
The streaming radio company is working hard to acquire Hits 102.7 KXMZ-FM, a radio station in Rapid City, S.D., that plays "all the hits without the rap." Pandora still needs the blessing of the FCC to go forward with purchasing the station's broadcasting.
But according to Bloomberg, FCC Chairman Tom Wheeler urged fellow members of the agency to give Pandora a waiver to go forward -- putting them one more step closer to owning the station. The company needs the waiver because the FCC doesn't allow radio companies that are more than 25 percent owned by foreign investors to broadcast in the U.S.
Pandora originally purchased the station in 2013 as part of a bid to pay lower royalty rates. Companies that compete with Pandora in the streaming music space, like iHeartMedia and CBS Radio, also own traditional radio stations, and because they do, they pay reduced royalty rates, which are negotiated between the Radio Music Licensing Committee and music publishers.
Pandora insists the purchase is about more than their royalty rates, though. “This move makes sense to us beyond the licensing parity alone,” said Pandora's Dave Grimaldi told Bloomberg. “We are excited to apply Pandora’s insights about listening habits to music programming that will reflect local listeners’ evolving tastes.”