Pandora Dominates Los Angeles Radio

In one respect, big radio companies have an edge over Pandora and Internet radio in general. While Pandora can claim the No.1 spot in Los Angeles in the aforementioned crucial demos, companies such as Clear Channel (CCMO.PK) and CBS Radio (A division of CBS) (CBS) can offer ad time across formats on their clusters in LA and other markets. As of this writing, Clear Channel owns 8 stations in Los Angeles, including KIIS and KBIG. CBS owns 6 outlets in the market. Emmis Communications(EMMS) owns Power 106, the other station mentioned in this article. That's pretty powerful, especially as terrestrial radio operators continue to move to multi-platform delivery of content.

At the same time, Pandora continues to increase its share of all radio listening and controls the market for Internet radio listening by a wide margin. And, as I explained earlier this week on TheStreet, the company is ideally situated to capitalize on the rapidly growing mobile advertising space.

At day's end, Pandora only needs to take a relatively small amount of advertising away from terrestrial radio to deliver formidable revenue. In 2011, radio stations across the United States collected $17.4 billion from advertisers. One percent of that number equals $174 million. Of course, 1 percent is an incredibly conservative estimate. Plus, any numbers derived from the $17.4 billion statistic only take into account advertising revenue Pandora takes from terrestrial radio coffers. Five percent brings that number up to $870 million.

According to Yahoo! Finance, analyst revenue estimates range from $543 and $685.8 million for the Pandora's next fiscal year (2014). For the current fiscal year (2013), analysts covering the company expect anywhere between $399.4 and $432.6 million in sales.

Pandora reports next Wednesday. Because the company would have to knock the snot out of the quarter to maintain the incredible momentum of the last week and month, I am not expecting much more upside. I do anticipate continued revenue growth, including in the important mobile arena. As Pandora continues to gain traction with local and national advertisers (and these buyers migrate some of their money to mobile), we'll start seeing the numbers that will trigger the long-term stock price appreciation I have been talking about.