(Via Bloomberg Business)

Internet radio pioneer Pandora Media Inc. won approval to buy a South Dakota radio station, a step toward paying lower music royalties.

The purchase of KXMZ-FM in Rapid City was approved by U.S. regulators in a June 2 letter. Owning the station qualifies Pandora for prices enjoyed by over-the-air competitors, the company said as it announced the purchase in 2013.

Pandora makes payments to play songs on its service to agencies such as the American Society of Composers, Authors and Publishers, or ASCAP, and Broadcast Music Inc., which represent rights holders such as songwriters and composers.

Pandora, based in Oakland, California, rose as much as 2.8 percent after the FCC’s decision was disclosed, and closed up 1.3 percent to $18.58 in New York trading.

ASCAP asked the FCC to block Pandora’s purchase, in part because it would result in lower licensing payments.
The FCC in its June 2 letter said it doesn’t examine business motivations for buying stations and presumes an applicant will serve its local community.

The acquisition would qualify Pandora for the same license terms as competitors, said Dave Grimaldi, a Pandora director.

Pandora has 42,000 users in Rapid City and it will apply its “insights about listening habits to music programming that will reflect local listeners’ evolving tastes,” Grimaldi said.