Pandora Media Inc P 0.86% shares jumped on Monday when the company announced a favorable decision from the U.S. Copyright Office regarding its “Web IV” royalty rate-setting case. The court ruled that Pandora’s 2014 deal with Merlin can be used as a benchmark for royalties in the proceedings, but a new report by FBR & Co analyst Barton Crockett cautions shareholders not to get ahead of themselves when it comes to the case’s outcome.
Background
Last year, the Copyright Royalty Board began proceedings to determine webcasting rates and terms based on the licenses of thousands of digital radio services, including Pandora. Royalty collector SoundExchange is calling for a royalty rate hike that Pandora believes would exceed sustainable levels for the industry.
The court ruled this week that Pandora’s deal with Merlin is admissible as evidence in determining a benchmark royalty rate. While the terms of the deal are not public, FBR analyst Ignatius Njoku recently wrote that “we believe in exchange for surfacing more Merlin artists on Pandora stations, Pandora received a lower rate per song than the current pure-play rate of $0.0014.”
Mixed language
Crockett cautions…
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