NBC And Why It's Paying $3.5 Billion For The Weather Channel

Weather Channel Logo
Weather Channel Logo

It was a busy holiday weekend for NBC Universal, CNBC's parent company. Along with private equity groups Bain Capital and Blackstone, it was finalizingits acquisition of the Weather Channel. The three are paying Landmark Communications a reported $3.5 billion, more than half in equity, split between the three.

NBC Universal had been the frontrunner since Time Warnerdropped out of the race about three weeks ago and the negotiations have been intense since then. The final price tag is far less than Landmark was looking for when it first put the property up for sale in January--a likely testament to how weak the credit markets are when it comes to financing a deal like this.

So why Weather? It is *the* weather info provider; its basic cable network reaches 96 million homes, and weather.com is one of the nation's most popular websites, with 40 million unique monthly users. The company also includes a forecasting service with 5,500 clients. I've blogged extensively about how cable is such a hot growth area, as more and more viewers shift away from networks, higher on the dial. And from what I can tell, the more unpredictable weather patterns are, the more appealing Weather Channel programming becomes.

And why does it make sense for NBC Universal? CEO Jeff Zucker was on CNBC this morning explaining that the deal, which is expected to be accretive form the start, is a perfect fit for NBC Universal's news and cable portfolio. From a news information standpoint it makes the company *the* weather authority, the cable network joins the likes of MSNBC and CNBC, and there are some obvious synergies.

Expect to see Today Show weatherman Al Roker on the Weather Channel or Weather.com and branded Weather Channel news could pop up on MSNBC or NBC. Then there's the new digital advantage Weather.com provides, giving NBC Universal its biggest ever web presence and opportunities to drive those websurfers to its other websites like NBC.comor Hulu.com. Zucker says that expanding and integrating Weather Channel's digital and mobile properties is a huge priority moving forward.

This isn't NBC's only investment in weather. It also owns "NBC Weather Plus" which was conceived of as a competitor to the Weather Channel, but it hasn't been much of a threat. For now NBC will continue to run both independently, evaluating in the next few months with the affiliates who use the service, how to proceed. The sale should be completed by the end of the year, pending regulatory approval.

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