Fortune
 Fortune editor at large
January 7 2008: 11:17 AM EST
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For sale: Weather forecasts, $5 billion

There's nothing exciting about the Weather Channel, but don't be surprised if a bidding war breaks out among media giants.

By Richard Siklos, editor at large

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There's a lot to like about the Weather Channel's business model. But is it worth $5 billion?

NEW YORK (Fortune) -- For a quarter century, the Weather Channel has been arguably the most boringly lucrative station on the dial. After all, we're talking about 24-7 weather updates from across this great nation presented on such straight-up shows as "Weekend View" and "Your Weather Today." Rather than Fox News' stentorian "we report, you decide," the Weather channel's motto might be: "We report, you decide what to wear."

Yet the channel is among the widest distributed outlets on cable and satellite, and its web counterpart, Weather.com, is the top destination for where people go for forecasts (as I did, probably 800 times, before, during and after a holiday road trip from New York to Toronto).

Now the owners of the Weather Channel, privately-held Landmark Communications, could be having the last laugh if they get anything close to the $5 billion-plus their company might reportedly fetch after retaining bankers to explore a sale. Landmark, mind you, includes a couple of CBS TV affiliates, a passel of newspapers including the Norfolk Virginian-Pilot, and some other businesses - but the Weather Channel and Weather.com, are the jewels in the crown. And their sale - really, their very existence - remind us of some basic and increasingly overlooked facts about how people really use media and why sometimes plodding, single-purpose simplicity can be a remarkably sound business model.

In the book The Weather Channel: The Improbable Rise of a Media Phenomenon, Frank Batten, the former CEO of Landmark, recounts the press conference he held in New York in 1981, at which several dozen journalists "let out a collective groan" when he unveiled the big new concept. "And from the tone of the questions that followed, it became all too clear what those groans meant," Batten wrote. "Isn't it a waste of a scarce transponder? Isn't 24 hours a day of weather going to be, well, dull? Who will actually watch this stuff?"

Actually, this is a view that was revisited last week by at least a couple of top media executives I chatted with. Some weren't sure that the channel would fetch anything like the numbers being tossed around - as much as $1.5 billion for the Weather Channel cable outlet and $3.5 billion for the Weather.com site according to an analyst quoted in the Wall Street Journal.

Basically, the doubts strangely echoed to the same one the hacks posed back in 1981: Isn't weather information increasingly a commodity? Why would anyone want to watch a cable channel on TV for weather updates when they could just go to the Web? How long can Weather.com stay on top? As one veteran of the cable wars put it to me, part of the value in any channel is in the rights to exclusive programming that it owns - and the Weather Channel has none of that. "In this Internet broadband world, I could recreate this for a lot less than $3.5 billion," this person said. "It makes me a bit nervous."

Who knows? This might be precisely the thinking of Landmark's owners - who haven't disclosed exactly why they picked this wobbly moment in the markets to decide to explore their options after years of rebuffing approaches from the integrated media giants.

But there is also reason to believe that there will be heated bidding for these businesses. The two most obvious buyers are NBC Universal (GE, Fortune 500) and News Corporation (NWS, Fortune 500), who both have 24-hour cable news channels and a large local TV news infrastructure that spends heavily on weather - which is, in fact, among the most popular features on local newscasts. All those choppers kitted out with the latest Doppler weather radar arrays add cost to penny-pinched newsrooms. NBC, in fact, has mounted a rival in recent years to the Weather Channel called WeatherPLUS - it's essentially a digital channel that is a joint venture with its affiliate stations, but has not made a serious dent among the much bigger Weather Channel.

For similar reasons, The Weather Channel might also fit nicely with CNN - which also has an aggressive web presence (and is owned by Fortune's parent, Time War (TWX, Fortune 500)ner) with which, like the Weather Channel, is based in Atlanta.

For a potential buyer, the upside in television is in sharing costs across more networks and taking advantage of cross-selling promotion. On the Web, who knows how sustainable the Weather.com brand's competitive advantage is - although, as I say, I can personally attest to its addictiveness.

The funny thing about it is that whoever buys the channel will be doing it for fundamentally "old media" reasons: People are innately (and arguably increasingly) interested in the weather, especially as they travel more and more. On television, viewers' habits are slower to change than people might think - people will still turn to the Weather Channel and wait minutes to hear what their local forecast is in the same way that many millions still tune in to their local TV newscasts and the nightly national newscasts to get their news, rather than tapping away at their interactive devices for instant gratification.

But most every media executive I spoke with last week said that there is little that can obviously be done to broaden or even transform the Weather Channel's franchise, either online or off. Its relatively small but steady TV audience is what it is. On the other hand, there are few networks that come up for sale that so clearly know who they are and what they do: with respect to the 110 meteorologists on the payroll and the guy who has the cool job of official "Storm Tracker," for most of us it is a utility. Of course, one of the hottest words in online media right now is "utility," (largely thanks to the growth of Facebook).

Batten and his crew recognized the potential value of sheer usefulness long before it was in vogue - they just wanted to help us decide what to wear.  To top of page

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