Activity in the digital music space is frenetic, to say the least.
On Monday, streaming service Rdio landed an investment from heavyweight Cumulus Media; Rhapsody cut 15 percent of its stake and its president is out; meanwhile, Pandora said it is raising $231 million.
- Rhapsody Cuts 15 Percent of Staff; President Resigns
Music streaming service Rhapsody laid off 15 percent of its staff and said its President Jon Irwin is stepping down. The company also announced investment firm Columbus Nova Technology Partners has become a major shareholder.
The company also said it had hired Ethan Rudin, a former Starbucks strategy executive, as Rhapsody’s chief financial officer, replacing Adi Dehejia.
While it looks for a new CEO, the company will be run by a committee of Rhapsody executives.
- Cumulus Backs Rdio
Cumulus Media, the second largest radio station owner in the country, is partnering with music streaming service Rdio, stepping up competition with Clear Channel.
The deal gives Cumulus an undisclosed minority stake in Rdio parent Pulser Media. Clear Channel, the biggest radio station owner in the country, has the iHeart Radio service.
Traditional radio station groups are doing all they can to stay relevant as listeners increasingly spend time on mobile devices with services like Pandora, Rhapsody and Spotify. Apple plans to launch its iTunes Radio on hundreds of millions of devices this week.
No money is changing hands immediately in the deal. Cumulus will offer on-air promotion of Rdio such as commercial time or talk segments. Cumulus will also sell advertising for Rdio’s upcoming free streaming service, expected by the end of the year, and provide exclusive content to Rdio, such as its Nash country music channel.
The online streams of Cumulus’ 525 radio stations have been playing on Clear Channel’s iHeart platform since late 2011. That won’t change for the time being.
- Pandora to Raise $231 Million With Sale of 10 Million Shares
Pandora., owner of the biggest Web radio service, filed to raise about $231 million by issuing new shares after its stock more than doubled this year.
The Oakland, California-based company plans to sell 10 million shares, according to a regulatory filing. Crosslink Capital Inc., Pandora’s biggest stockholder, will sell an additional 4 million shares. Underwriters including JPMorgan Chase & Co., Morgan Stanley and Wells Fargo & Co. have a 30-day option to purchase an additional 2.1 million shares, potentially increasing Pandora’s proceeds to almost $280 million.
Pandora is raising money as it seeks to open local sales offices to compete better with radio stations for advertisers. Last week the company named digital ad veteran Brian McAndrews as chairman and chief executive officer. Some proceeds, estimated based on the Sept. 13 closing price of $23.99, will be used for acquisitions and developing new technology.
“We may use a portion of the net proceeds for potential acquisitions of businesses, products or technologies, although we have no current agreements or understandings with respect to any such transactions,” Pandora said in the filing.
Pandora fell 4.5 percent to $22.90 in extended trading yesterday. The shares were unchanged at the New York close and have more than doubled this year.
Crosslink Capital will remain Pandora’s biggest shareholder after the sale. The company will hold 25 million shares, or about 13 percent of the outstanding stock, after the transaction, according to the filing.
(Note: This story has been updated to correct the title for Rhapsody executive’s title.)