NEW YORK (AP) — Shares of Pandora Media Inc. tumbled Friday afternoon after a report by The Wall Street Journal that Apple Inc. is in talks to license music for an online radio service similar to Pandora's.
THE SPARK: The Journal's Friday edition said Apple is pursuing such a service because it is trying to expand its dominance in online music. It cited unidentified people familiar with the matter. Apple spokesman Tom Neumayr declined to comment on rumors and speculation. Pandora spokeswoman Mollie Starr said the company did not comment on rumors or the stock price.
THE BIG PICTURE: Pandora has several rivals already, including Spotify. But Apple's control over the iPhone and iPad could let it emphasize its own service.
Pandora pays royalties at statutory rates much like a regular radio station does. Apple is discussing licensing deals with record companies because it wants to sidestep some of the restrictions that apply to online radio. For instance, Pandora prevents users from listening to the same song twice in a row.
Representatives from the major recording companies, Warner Music Group Corp., Sony Music, Universal Music Group and EMI Group Ltd., as well as Pandora, did not immediately respond to requests for comment.
SHARE ACTION: Pandora shares fell $2.11, or 17 percent, to $10.46. It's the company's third-biggest single-day decline since going public in June 2011 at $16 per share.
Pandora stock had gained 25 percent since Aug. 29, when the Oakland, Calif., company provided an upbeat forecast for the third quarter and said it's selling more advertising on phones.