LOS ANGELES (AP) — Pandora stock hit an all-time high Thursday in the wake of a court ruling that should help the Internet radio giant trim its songwriter royalty costs.
On the heels of the ruling, the company also moved to raise more money from investors in a stock sale. On Thursday, Pandora Media Inc. increased the number of shares it is offering to the public and raised the offer price to $25 from $23.99. That could net it as much as $379 million, $100 million more than a plan it unveiled three days ago and more than triple the $91.7 million it raised with its initial public offering of stock in June 2011.
The bolstered offering suggests there is strong demand for shares of the Oakland, Calif.-based company as revenue from listening on mobile devices grows. The offering comes as stock markets got a lift this week from the Federal Reserve's decision not to pull back its bond-buying stimulus program.
B. Riley analyst Sameet Sinha said a number of factors are going Pandora's way. Tuesday's ruling by a district court in New York prevents music publishers from trying to cut better deals outside of the songwriting society known as ASCAP. Combined with the company's move in June to buy a radio station in South Dakota, Pandora should be able to cut its royalty costs by $4 million to $5 million next year, Sinha said in a research note Thursday.
The company paid 58 percent of its revenue, or $164.7 million, in royalties in the first half of its fiscal year through July.
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