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NBC in talks on Weather Channel

The network and two partners are said to offer nearly $3.5 billion for the cable station and its website.

June 14, 2008|Meg James | Times Staff Writer

Puffy little cloud, move over. The Weather Channel might soon be sporting peacock feathers.

Landmark Communications Inc. said late Friday that it had entered into exclusive negotiations to sell its widely available cable channel and popular Weather.com website to a consortium of NBC Universal and private equity firms Blackstone Group and Bain Capital.

The group offered Norfolk, Va.-based Landmark nearly $3.5 billion, according to two people close to the negotiations who asked not to be identified because they were not authorized to discuss financial terms.

"This is one of those unique assets that you can't create from scratch," said analyst Larry Gerbrandt of Media Valuation Partners. "It's the only one, and it's not like anyone is saying that we need two or three Weather Channels."

A sale would cap an auction that began early this year with a flurry of interest among media and private equity companies. But in the end, most took a pass.

Privately held Landmark had sought as much as $5 billion for its weather assets, an amount that potential bidders quickly dismissed as too high. Some potential suitors also were discouraged by the structure of the sale, which one media executive said would result in considerable tax consequences.

Bidders, including General Electric Co.-owned NBC Universal, were particularly interested in Landmark's website, at www.weather.com. The site last month attracted 38 million visitors, nearly four times more than its closest competitor, according to Nielsen Online.

"The website is doing quite well," said Derek Baine, cable analyst with consulting firm SNL Kagan.

He estimates that the Weather Channel takes in about $300 million in revenue a year, with a third of that coming from the website.

"That's an anomaly in the cable business to have a third of your revenue, in this case $100 million, coming from a website," Baine said. In contrast, he said, "the core cable channel is mature and its revenue has been slowly growing."

Indeed, NBC's interest was piqued by the potential of the weather website. The network owns WeatherPlus, a weather-information business.

Observers note that the Weather Channel could be leveraged to more deeply explore environmental issues. Discovery Communications Inc. this month launched its own Planet Green channel focusing on the environment.

The auction came down to two bidders: the NBC-Blackstone-Bain consortium and Time Warner Inc., which owns such cable channels as CNN, TBS and TNT, all based in Atlanta, also home to the Weather Channel.

Time Warner withdrew its bid Friday. Executives declined to discuss their decision. However, last week, Chief Financial Officer John Martin hinted that price might become the sticking point. He said the company was going to be "extremely price disciplined and price sensitive" in its pursuit.

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meg.james@latimes.com

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