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FCC Affirms Rulings on Pandora

Despite objections of ASCAP, Media Bureau upholds station acquisition and foreign ownership decisions

The FCC upheld an earlier two-prong decision on Pandora Media despite a request from a music performance royalty organization that the two issues be reconsidered.

The Media Bureau took the action over the objection of the American Society of Composers, Authors and Publishers. ASCAP had taken issue with Pandora’s certification of compliance with the foreign ownership limits and its motivations for acquiring a radio station.

The FCC initially ruled in June that Pandora could legally exceed the 25 percent benchmark of foreign investment as described in the Communications Act. As a publicly traded U.S. company, Pandora Media was unable to determine the citizenship of its shareholders sufficiently to demonstrate that its foreign ownership does not exceed the 25 percent foreign ownership standard. Analyzing Pandora’s ownership structure, the FCC found that no single foreign entity held a 5 percent or greater voting interest and as thus permitted Pandora to exceed the foreign ownership benchmarks.

Also earlier this year, the Media Bureau approved Pandora’s application to acquire station KXMZ(FM) in Box Elder, S.D. from Connoisseur Media Licenses. ASCAP wanted this decision to be reconsidered as well, saying in its petition for reconsideration that Pandora Radio would be able, as a broadcast licensee, to successfully litigate lower licensing fees.

“If Pandora uses its newfound status as a broadcaster to successfully litigate lower licensing fees, large music publishers may well follow through on their threat to withdraw” from ASCAP,” said its filing to the FCC said.

That reasoning is spectulative, the FCC wrote in its order. “Because ASCAP’s predictions depend on the independent actions of third parties, the Bureau concluded that ASCAP had not established either causation or redressability, two requirements for judicial standing,” the FCC said in its order.

“Whatever the impact of its acquisition on such royalty rates may be, Pandora has undertaken to offer programming responsive to the interests of its local listeners, and ASCAP has failed to identify any substantial and material question about Pandora’s ability to provide such service in the public interest,” the FCC said in its order.