Several news outlets are reporting that Pandora is close to a settlement over pre-1972 performance royalties.
The company itself isn’t commenting on the story, first reported by the New York Post.
At least one Wall Street analyst predicts if Pandora does follow SiriusXM’s lead and pay some $60 million for past performances and another $30 million for streaming pre-1972 music in 2016, that decision could have ramifications for the pure-play streamer’s margins, balance sheets and label relations.
According to the Post, the deal could be approved at Pandora’s board meeting on Oct. 20.
Pandora’s EBITDA is currently estimated at $84 million. But if they pay a $30 million annualized fee, it could impact the margins, and if the Copyright Royalty Board makes a higher rate decision, that could lower EBITDA in 2016, according to FBR & Co. stock analyst Barton Crockett.
“Pandora had cash and investments at the end of June of $461 million. The company is paying cash of $225 million for the pending Ticketfly acquisition. This settlement could take the balance down another $60 million, with questions about potential incremental cash burn next year,” according to Crockett in a client note.
Crockett expressed concern about the possibility that Pandora might need to undertake a capital raise for global deals following the CRB ruling.
