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Let's talk about the Weather (Channel)
Increased TV and Web ratings may make the Weather Channel an attractive fit for a larger media firm.
September 9, 2005: 2:12 PM EDT
By Paul R. La Monica, CNN/Money senior writer
Weather Winner
The Weather Channel's Web site attracted more viewers than major news outlets when Katrina hit.
Web site Unique visitors 
Weather Channel 7.7 million 
CNN 6.9 million 
MSNBC 6.5 million 
AOL News 3.1 million 
Fox News 2.0 million 
ABCNEWS Digital 1.1 million 
 * based on traffic on 8/29
 Source:  Nielsen/NetRatings

NEW YORK (CNN/Money) – Hurricane Katrina has been the dominant news story for the past two weeks.

But the biggest beneficiary of the wall-to-wall coverage of the devastation in the Gulf Coast is arguably not any of the major news outlets but niche cable network, The Weather Channel.

According to data from Nielsen Media Research, nearly 51 million viewers tuned into the Weather Channel on Aug. 28, the day before the storm hit the Gulf Coast. That gave the network its highest ratings in the company's history, according to the Weather Channel.

The Weather Channel's Web site, Weather.com, also saw a huge boost because of Katrina. On Aug. 29, Weather.com had 7.7 million unique visitors to the site, according to Nielsen/NetRatings.

To put that into context, that was a 73 percent increase in traffic from a week earlier. What's more, Weather.com wound up with more viewers on Aug. 29 than the Web sites for ABC News, Fox News, MSNBC, AOL News and CNN. (AOL and CNN, like CNN/Money, are all owned by Time Warner (Research).)

And considering that there is still more than two and a half months left in hurricane season, it seems likely that the Weather Channel's ratings success should continue. In addition, many weather experts are predicting that there could be above average hurricane activity for the next few years.

More cable mergers in the forecast

So should a larger media company make a play for the Weather Channel to take advantage of increased ratings?

A spokeswoman for the Weather Channel, owned by privately held Landmark Communications, which also owns several daily and weekly newspapers, said there have been suitors but that the company is not willing to sell out.

"Over the years, many people have been interested in acquiring us but we are remaining independent," said Kathy Lane, a spokeswoman for the Weather Channel.

But in a world where most major cable channels are owned by larger media giants, it makes it tougher for independent operators to effectively compete for viewers and advertisers, which has led to several sales of smaller networks in the past few years.

To that end, BET sold out to Viacom (Research) in 2000. General Electric's (Research) NBC bought Bravo from Cablevision (Research) in 2002. And TechTV was purchased by Comcast (Research), the nation's largest cable company, last year.

What's more, Crown Media Holdings (Research), which owns the Hallmark channel, announced last month that it was "exploring strategic alternatives," including a possible sale of the company.

"The Weather Channel is one of the few remaining privately owned cable channels out there," said Matthew Harrigan, a media analyst with Janco Partners. "If there were a deal it would probably make sense for a company that also owned a broadcast network to buy it."

With that in mind, News Corp (Research), Viacom, NBC, Time Warner and Walt Disney (Research) are the companies that would be the most likely to be interested. But Harrigan said Comcast shouldn't be ruled out either since the Weather Channel would be a good fit with the company's local news stations.

Comcast did make a bold play to try and purchase Disney last year so it's clearly interested in content as well as distribution. In addition, Landmark's president and COO, Decker Anstrom, is a member of Comcast's board of directors.

Thomas Eagan, a media analyst with Oppenheimer, said he expects to see more cable channel acquisitions in the coming year as well. And that could put increased pressure on the Weather Channel to find a larger partner.

Eagan said that Viacom is more likely to make more cable deals once it splits its cable networks such as MTV and Nickelodeon into a separate publicly traded company. He added that Discovery Holding (Research), recently spun-off from John Malone's Liberty Media (Research), is also a possible buyer. Discovery owns The Discovery Channel, TLC, Animal Planet and The Travel Channel.

Tougher to stay independent

Lane conceded that consolidation in the media business makes operating as an independent company more of a challenge. "It does make life a little bit more difficult," she said.

Still, it's unclear if any media company would also be interested in Landmark's newspapers. News Corp. is the only one of the major media conglomerates that also owns a newspaper division.

Since Landmark is privately held, it's difficult to ascertain a value for the company. Crown Media, which reported sales of $241.3 million last year, has a current market value of $1.16 billion. For what it's worth, Landmark generated an estimated $742 million in sales in 2003, according to figures from financial database Hoovers.

Eagan said that a network like the Weather Channel would not come cheap. Since it's already available in the basic cable packages of most major cable systems, it's less likely that the Weather Channel's available viewers would increase substantially if it were to be purchased by a company like Comcast.

Plus, given the network's ratings success lately, the Weather Channel would be dealing from a position of strength.

"To buy someone like the Weather Channel, a company is going to have to pay a high price," Eagan said.

For more coverage of Katrina's effects on business, click here.

For a look at why newspaper stocks have been lousy investments, click here.

The reporter of this story owns shares of Time Warner through his company's 401(k) plan.  Top of page

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