News -
31/07/2013
ASCAP battles against Pandora's acquisition of a terrestrial station
Back in June we reported on Pandora's acquisition of terrestrial radio station KXMZ-FM in South Dakota. The company trumpeted the acquisition as a way to lower the royalty fees it has to pay to the American Society of Composers, Authors and Publishers - better known as ASCAP. These lower fees according to Pandora are available to terrestrial broadcaster who also have an internet radio service and should kick off once the internet radio giant started to operate on the terrestrial spectrum as well, even if on a small scale.
Now this acquisition has become a battleground between ASCAP and Pandora, since any time a radio station changes hands in the US it has to go under approval from the Federal Communications Commission (FCC). If Pandora had kept quiet and only announced after everything was completed it would have probably not had any problem, but since it made it intentions very clear from the outset ASCAP decided to place a complaint with the FCC questioning the motives of the acquisition - which are to use the station as a bargaining chip and a publicity stunt - and also the ownership of Pandora which not entirely US-owned (another potential issue for the FCC).
It's hard to say whether these reasons alone are going to be ground for the FCC declining approval altogether but they are likely to cause some delays which will play in ASCAP's favour since the longer Pandora does not have official ownership of the station the longer it will have to keep paying higher rates. It also gives ASCAP a little longer to prepare a challenge to the lowering of Pandora's rates if and when it does acquire KXMZ-FM.
It sounds as if Pandora would have had a much easier time going through with the process and then announcing its completion alongside its motives at a later stage. By jumping the gun as it did it may have put brakes on what would have been a pretty clever way to exploit an existing loophole.
Now this acquisition has become a battleground between ASCAP and Pandora, since any time a radio station changes hands in the US it has to go under approval from the Federal Communications Commission (FCC). If Pandora had kept quiet and only announced after everything was completed it would have probably not had any problem, but since it made it intentions very clear from the outset ASCAP decided to place a complaint with the FCC questioning the motives of the acquisition - which are to use the station as a bargaining chip and a publicity stunt - and also the ownership of Pandora which not entirely US-owned (another potential issue for the FCC).
It's hard to say whether these reasons alone are going to be ground for the FCC declining approval altogether but they are likely to cause some delays which will play in ASCAP's favour since the longer Pandora does not have official ownership of the station the longer it will have to keep paying higher rates. It also gives ASCAP a little longer to prepare a challenge to the lowering of Pandora's rates if and when it does acquire KXMZ-FM.
It sounds as if Pandora would have had a much easier time going through with the process and then announcing its completion alongside its motives at a later stage. By jumping the gun as it did it may have put brakes on what would have been a pretty clever way to exploit an existing loophole.