FCC approves Pandora’s acquisition of South Dakota radio station

pandoraI was just in South Dakota on vacation to visit Mt. Rushmore and several other historic sights and I heard “powered by Pandora” on the local radio station from Rapid City.  And that got me curious.

Turns out, the Federal Communications Commission (FCC) has just given regulatory approval for Pandora Media, operators of the widely-popular streaming music service, to acquire a radio station in South Dakota.

The decision, which was handed down by the FCC Monday evening, came three years after Pandora sought to acquire Rapid City-based pop station KXMZ as a way of lowering the company’s licensing obligations to royalty managers ASCAP and BMI.

The FCC’s decision was delayed after the agency determined Pandora to be a foreign-owned company because the streaming music operator failed to supply adequate evidence that at least 75 percent of its company was owned by American citizens. Federal regulation forbids a “foreign government or its representative” from possession a radio license in the U.S.

In its 2014 application for KXMZ’s license, the California-based Pandora submitted mailing addresses for some of its owners, which the FCC determined was not enough for Pandora to meet its requirement under the domestic ownership rule. Pandora, a publicly-traded company, later told the FCC it could not definitively comply with the agency’s requirement regarding domestic ownership due to Securities and Exchange Commission privacy regulations. Pandora requested the FCC ease its ownership rule by raising the cap on foreign owners to 49.99 percent, a proposal the agency later denied.

On Monday, the FCC granted Pandora a waiver under federal foreign ownership rules, something that had been widely objected to by ASCAP and other royalty managers.

Pandora has been aggressive about acquiring KXMZ in order to qualify for lower payment rates to ASCAP, BMI and others. Currently, performance rights organizations like like ASCAP and BMI set a royalty rate for streaming music services and an entirely different rate for over-the-air broadcasters who also stream online.

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