Technically, it is driving the modulation of an FM transmitter past its 100% range, i.e. outside of its given bandwidth. This sounds to a listener as distortion, since the receiver is clipping off the out of bounds signal.
On audio, and not a transmitter, I would be more prone to think he means it is being sent at well over the average spec limits for the input rating. If the amp/tv/etc has a 1V peak to peak input level, and the DirecTv box on Pandora is outputting 1.5V peak to peak, the limiter inside the amp is going to cut off the extra .5 volts to prevent damage to itself, and that will result in clipping the high volume passages.
While it is true Pandora is outputting louder signal than regular programming, I havent heard any clipping. YOu would really need to run to output of the Directv box through an O-scope to tell if it was or not, for sure.
Since Pandora is stereo 2+0, its going to be a different signal than normal TV, so the OP might have to change his amp to match the setting of the music, be it Stereo, or using one of the amps DSP modes to simulate surround.
I simply turn off my rear speakers, and just use the front L,R and Sub when listening to Pandora. Leaving my amp on Surround just does not sound right to me, since the music isnt encoded for surround. YMMV.