U.S. regulators on Monday moved to allow Pandora Media Inc to exceed the 25 percent cap on foreign ownership in a U.S. broadcaster as the Internet radio company prepares to buy radio station KXMZ FM in South Dakota.
The waiver from the Federal Communications Commission brings Pandora closer to closing the pending deal, announced in 2013. The streaming service hopes this will allow it to pay lower music royalty fees on par with some of its rivals.
As conditions of the waiver, the FCC requires Pandora to get the agency's approval if the total foreign equity or foreign voting interests exceed 49.99 percent, if its board of directors changes to become mostly foreign or if a foreigner or a group wants to buy more than 5 percent voting or equity interest.
Under U.S. law, foreigners cannot have more than a quarter stake in a broadcast station. Corporate privacy laws complicated Pandora's efforts to prove that its foreign shareholders' stakes did not exceed that threshold.
"We find that it would serve the public interest to permit a widely dispersed group of shareholders to hold aggregate foreign ownership in Pandora Media in excess of the 25 percent benchmark," the regulators said in Monday's ruling.
Pandora remains in a copyright performance royalty dispute with the American Society of Composers, Authors and Publishers, the music licensing organization. The group objects to the deal and has pushed the FCC to reject Pandora's waiver request.
The FCC on Monday said the law did not require the agency to examine Pandora's business rationale in order to weigh potential unacceptable foreign influence over a U.S. broadcast station.