SNAFU: Poor Quality Reporting on Pandora Financials

We’ll have more on the quirky CRB decision shortly, but let’s get something out of the way about the reporting.  Even the so-called business press doesn’t seem to be able to look past one item on Pandora’s financials:  royalties.  (Or as Pandora defines it, “content acquisition costs).)

If you read any–and I mean any–of the coverage on the CRB decision, you will come away with the impression that Pandora is both being crippled by royalty payments AND has the cash to buy over $525 million in non-core assets.  But Pandora “has never turned a profit”.

Nobody mentions the fact that Pandora has actually managed to do pretty well on the revenue side–over $1 billion in the last 12 months with a gross profit over $400 million.  So why can’t Pandora “turn a profit”, meaning a net profit?

It’s not that they’re paying so much in royalties for music, their only product as far as we can tell.  It’s because they’re spending too damn much money running the company.  Not to mention stupid Valley tricks like buying a radio station in South Dakota to try to loophole their way to screwing songwriters.  (Has anyone on Pandora’s executive team ever been to South Dakota?)  Not to mention stiffing old guys and dead cats on pre-72 royalties, only to have to cough up $90 million in settlement–plus millions in legal fees.  Stupid, stupid, stupid.

Don’t you expect to see analysis of how the company’s executive team spends money and makes decisions from business reporters.  Dig into the income statement, slash through the balance sheet.  Do some analysis.

But no–despite $1 billion in top line revenue Pandora has poor mouthed for so long that the business press don’t even bother looking past the one issue.  Much less question the judgement.

When will these journalists start doing their job?