Pandora Settles With Labels Over Pre-1972 Recordings, Shows 30% Revenue Increase For Third Quarter

$90 Million Settlement

PANDORA MEDIA and five label groups announced a $90 million settlement of their dispute over the streaming music service's use of pre-1972 recordings. The settlement with ABKCO MUSIC & RECORDS, CAPITOL, SONY MUSIC ENTERTAINMENT, UMG RECORDINGS, and WARNER MUSIC GROUP calls for PANDORA to pay $90 million to end the litigation.

"PANDORA is excited to have found resolution with these record labels,” said PANDORA CEO BRIAN MCANDREWS. “Together we share a common objective to grow the music industry and support artists. We pursued this settlement in order to move the conversation forward and continue to foster a better, collaborative relationship with the labels.”

“Major settlements with SIRIUSXM and now PANDORA means that an iconic generation of artists and the labels that supported them will be paid for the use of their creative works,” said RECORDING INDUSTRY ASSOCIATION OF AMERICA (RIAA) Chairman and CEO CARY SHERMAN. “That is a significant milestone and a big win for the music community. We appreciate the collaborative and constructive approach of PANDORA’s team in resolving this longstanding issue for artists and labels.”

Added SOUNDEXCHANGE Pres./CEO MICHAEL HUPPE: "We are pleased that PANDORA has agreed to pay these legacy artists, giving them the compensation and respect they have earned. It is a great day when performers are paid for their work as all artists should be paid fairly, every time their music is used, across all platforms. This is a good start, which we hope encourages all services -- including PANDORA -- to pay for all pre-'72 recordings across all of their programming."

Numbers Looking Up For Pandora In Third Quarter

Meanwhile, PANDORA's third-quarter 2015 total revenue rose 30% year-to-year to $311.6 million, with ad revenue up 31% to $254.7 million (local up 52% to $63.5 million), subscription and other revenue up 26% to $56.9 million, and mobile up 36% to $255.2 million. Adjusted EBITDA increased 27% to $30.6 million. The numbers missed WALL STREET projections slightly.

On the usage side, total listener hours grew 3% to 5.14 billion and the active listener count increased from 76.5 million to 78.1 million.

“PANDORA exited Q3 with strong financial results. In a quarter where a large new entrant came into the music streaming landscape and over a hundred million dollars in combined marketing was spent across the sector to drive awareness of a multitude of offerings, PANDORA more than held its own for users and hours growth,” said MCANDREWS. “We aggressively invested to deliver long-term growth and cement PANDORA’s leadership in music. Our acquisition of TICKETFLY will be truly transformative, extending our long-standing strength in music discovery to the large and fast-growing world of live events. Additionally, with our pre-1972 settlement, we are continuing to strengthen our relationships across the music landscape by resolving an historic source of tension. This progress points to a greater opportunity to work collaboratively toward a bright future for music in a digital era, those who make it, and the fans who love it.”

Fourth-quarter guidance is for revenue in the range of $325 million to $330 million. Adjusted EBITDA is expected to be in the range of $25 million to $30 million. The guidance does not include TICKETFLY’s financial results for the fourth quarter.

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