After Apple Unveils iTunes Radio, Pandora Buys a Radio Station in South Dakota

Photograph by Ramin Talaie/Bloomberg

Pandora agreed to buy a radio station in South Dakota to qualify for compulsory royalty rates.

All ears were on Pandora Media yesterday after Apple showed its competing streaming-music service, iTunes Radio. Pandora answered with an acquisition today — of an FM radio station. In South Dakota.

Pandora said it entered into a pact to acquire KXMZ-FM, my colleague Andy Fixmer reported. Mollie Starr, a spokeswoman for the Internet-radio company, declined to disclose terms of the deal. The Rapid City, South Dakota-based terrestrial broadcaster is known locally for morning DJ Mike Swafford, and for the station’s tagline, “Today’s best hits without the rap.”

Listeners of Pandora’s personalized radio service shouldn’t expect to hear interruptions from DJ Mike on their 50 Cent station. The “catalyst” for Pandora buying the station is to defend against legal attacks by music publishers that seek to “discriminate against Pandora and significantly higher rates than those paid by our competitors,” Starr wrote in an e-mail.

Owning a traditional radio station allows Pandora to qualify for some settlement agreements on royalties and musical performances. There could also be other benefits, Starr said.

“We believe there are significant synergies between running Pandora and operating a local FM station, particularly in the areas of programming, marketing and advertising sales, and we look forward to exploring these,” she wrote.

That could translate into more effective Pandora ads for users living in South Dakota. Or who knows, it could mean some extra airtime for DJ Mike.

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