NBC Acquires Weather Channel

In Deal With Private Equity Firms, Peacock Channel Adds to Its Cable Portfolio

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NEW YORK (AdAge.com) -- NBC Universal and two private equity firms clinched a deal Sunday to purchase the Weather Channel, allowing NBC to add to its cable portfolio while hedging its financial exposure and risk.

NBC Universal, Bain Capital and the Blackstone Group announced on June 13 that they had entered into exclusive negotiations to purchase the Weather Channel properties from Landmark Communications. While financial terms of the deal were not disclosed, the Financial Times reported the price tag at about $3.2 billion. The Weather Channel will operate as a separate entity, based in Atlanta, with NBC Universal providing management of the operation.

The purchase marks NBC's latest attempt to bolster its cable operations at a time when its flagship broadcast unit faces increased challenges. Cable networks have been showing increased strength in the ad marketplace, taking share from once-dominant broadcasters, who have been hobbled by ratings erosion, a recently completed writers strike and technology allowing viewers to skip the ads that support costly first-run dramas and comedies.

"Joining with the Weather Channel properties plays to our strengths in developing and programming cable networks, and in producing and distributing high-quality content across multiple platforms," NBC Universal CEO Jeff Zucker said in a prepared statement.

While other cable networks aim to capture niches -- fans of cooking, sports or one of the many series of "Law & Order" programs, for example -- the Weather Channel offers a broad reach. The outlet specializes in distributing information that most everyone likes know about -- the weather. Viewers don't often record its content and watch it days later. They usually watch the channel live. What's more, the channel has for some time featured shorter ad breaks, meaning that viewers don't have to wait as long to get back to the content that drives so much of their curiosity.

The transaction includes the Weather Channel, which is seen in more than 97% of cable TV homes in the U.S.; and Weather Channel Interactive, which includes weather.com. The deal is expected to be completed by year's end, subject to receipt of customary regulatory approvals.

The pact also takes out one of the last remaining independent cable networks. Over the last several years, stand-alone outlets such as Oxygen and CourtTV have been snapped up by NBC and Time Warner. Those few that remain, such as Hallmark Channel, are seen as targets for others. Stand-alone networks have found it more difficult to compete with bigger, multichannel operators such as Time Warner, Viacom, Discovery Networks and Comcast, who can offer advertisers broader deals that allow them to cultivate different groups of consumers attracted to various topics.
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