KXMZ

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KXMZ
City of license Box Elder, South Dakota
Broadcast area Rapid City, South Dakota
Branding Hits 102.7
Slogan "Today's Best Hits Without The Rap"
Frequency 102.7 MHz
First air date March 12, 2008
Format Hot AC
ERP 50,000 watts
HAAT 137 meters (449 feet)
Class C2
Owner Connoisseur Media
(Connoisseur Media Licenses, LLC)
Webcast Listen Live!
Website www.hits1027.com

KXMZ (102.7 FM) is a radio station serving the city of Rapid City, South Dakota owned by the broadcasting company Connoisseur Media. Licensed to Box Elder, South Dakota, the station broadcasts a hot AC format under the name "Hits 102.7".

The station became the subject of notoriety in June 2013, when the owners of the internet radio service Pandora announced a deal to purchase the station as a loophole in its disputes with music publishing societies over royalty payments. The purchase was ultimately rejected by the FCC, following objections by ASCAP over the nature of the purchase, and because Pandora did not properly disclose its level of foreign ownership.

Attempted purchase by Pandora[edit]

The internet radio service Pandora Radio had historically been in conflicts with ASCAP and BMI over increasing royalty rates for internet radio licenses relating to the service.[1] Pandora had filed a lawsuit against ASCAP in November 2012, alleging that the collection society was charging Pandora higher royalty rates for internet radio than those negotiated by the Radio Music License Committee (a group of broadcasters which includes Clear Channel Communications, owners of the competing service iHeartRadio, along with Cumulus Media and CBS Radio), thus giving terrestrial radio broadcasters preferential treatment. Pandora also believed that it should also be charged lower rates directly from ASCAP because it had reached separate licensing deals with Sony/ATV Music Publishing and EMI Music Publishing.[2]

On June 11, 2013, Pandora Media, the parent company of Pandora Radio, announced via a letter posted on the website of The Hill newspaper by Pandora's assistant general counsel, Christopher Harrison, that it would acquire KXMZ for an undisclosed amount. The purchase of the station serves as both a strategic move and a publicity stunt; Pandora believed that acquiring a terrestrial radio station would allow the service to receive the same internet radio license that the Radio Music License Committee had negotiated, while drawing attention to the fact that broadcast radio stations do not need to pay such royalties. At the same time, Pandora also announced that it was filing a motion in a federal district court claiming that ASCAP was violating an antitrust consent decree issued by the Department of Justice. Alongside the preferential treatment of terrestrial radio companies, Pandora accused ASCAP of violating the decree by allowing its members to individually pull their content from its blanket license, but refusing to indicate which songs would be affected when re-negotiating with a company who did so, leaving Pandora liable for copyright infringement.[1][3][4]

Pandora also stated that the acquisition would be used as a way to apply its music personalization insight (such as the Music Genome Project) to terrestrial radio; under its ownership, KXMZ will broadcast music tailored to reflect local listening habits as gauged by the Pandora service, which the company claimed is used by over 42,000 users in the Rapid City market.[3][4]

The move was criticized by David Israelite, CEO of the National Music Publishers Association, who declared that Pandora was now "at war with songwriters," and had lost its credibility because it was resorting to "lawsuits and gimmicks" to make its point. However, a member of Public Knowledge praised the move, by stating that it was "a perfect example of the twisted incentives and strange results we get from a music licensing system that is based on who wants a license instead of just what they want to do with the music they’re using."[5][6]

The purchase application was filed to the FCC on June 20, 2013. The application includes a copy of the sale agreement indicating that Pandora will pay US$600,000 for the station, as well as a local marketing agreement showing that Pandora began operating the station on June 10.[7] However, ASCAP filed a petition to deny the acquisition, arguing that the acquisition would not serve KXMZ's public service obligations because of Pandora's intent for the station as a "bargaining chip" for royalty payments, and also alleged that Pandora did not provide enough information about its ownership structure to prove that less than 25% of the company was owned by foreign interests. On January 14, 2014, the FCC rejected the acquisition, ruling that Pandora failed to "demonstrate adequate support for its foreign ownership compliance certification."[8][9]

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Coordinates: 44°05′31″N 103°14′56″W / 44.092°N 103.249°W / 44.092; -103.249