Internet radio company
Pandora Media Inc.
) is currently tangled in a licensing dispute with Broadcast
Music Inc. (BMI), a songwriters group, in trying to gain access
to the works excluded from the group's recent media
Pandora suffered a setback when U.S. District Judge Louis L.
Stanton rejected Pandora's request to honor its license for all
of BMI's work in spite of the publishers' efforts to modify their
contracts to exclude Internet streaming.
The District Judge ruled that publishers can use their
discretion to license or not to license the performance of their
compositions and that copyright holders such as BMI have the
right to withdraw their composition from Internet streaming.
BMI works as an intermediary between songwriters and
organizations that wish to play their music on a publicly traded
platform. The firm handles rights of around 8.5 million musical
works created by more than 600,000 songwriters, along with the
composers and music publishers. In order to safeguard the
interest of all these music professionals, the company sued
Pandora in June over a royalty fee disagreement.
We note that in September, Pandora won a court order against
the American Society of Composers, Authors and Publishers
(ASCAP), which was trying to limit the number of songs licensed
to Pandora. This helped Pandora to access the song resources at
Pandora continues to strengthen its position in the U.S.
web-based radio market, as listening hours jumped 18% to 1.49
billion in Nov 2013 from the year-ago month . Listening hours
were also slightly better than 1.47 billion reported in
Additionally, Pandora's share of total U.S. radio listening
market surged to 8.44% compared to 7.17% in the year-ago month
and 8.10% in Oct 2013. Some of these positive developments were
also reflected in Pandora's share price, which moved up 4.41% to
reach a level of $28.20 as of Dec 19, 2013.
Moreover, Pandora also has a first mover's advantage in the
music streaming industry. We believe that the company already has
a popular service, driven by its effective discovery engine and a
well-established infrastructure, which place it well to compete
against the likes of
Although the recent court ruling acts as a dampener for
Pandora, we believe that itis poised for growth in the long
Currently, Pandora has a Zacks Rank #3 (Hold).
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