Change in Forecast for Weather

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Barely one week into the New Year, Landmark Communications, the Norfolk, Va.-based parent of The Weather Channel, is gauging which way the deal-making wind blows.

<p>Snapshot</p><p>The Weather Channel Cos.</p>


Debora J. Wilson




96 million homes


269,000, on average


800 (125 meteorologists)



Landmark said last Thursday that it has hired investment bankers JP Morgan Chase and Lehman Bros. to advise it in a strategic review that could include a possible breakup of the company, including the sale of The Weather Channel.

The possibility of Landmark looking to sell off its most widely known asset was first reported by The New York Times. The Weather Channel, which marked its 25th anniversary this year, reaches 96 million households and was the 43rd most-watched cable network each day, on average, in 2007, according to a The Walt Disney Co. analysis of Nielsen Media Research data.

“At this early stage, we cannot speculate on where this process will lead,” Landmark chairman and CEO Frank Batten Jr. said in a statement.

Landmark president and chief operating officer Decker Anstrom said in an interview that the company believed that it was a good time for a independent, family-owned media company to evaluate its options.

In addition to The Weather Channel, Landmark owns newspapers The Virginian-Pilot in Norfolk, Va.; The News & Record in Greensboro, N.C.; The Roanoke Times in Roanoke, Va.; 50 other small community newspapers and two CBS-affiliated television stations.

While Anstrom would not disclose financial figures, Weather Channel is on track to report double-digit profit growth in 2008 and beyond, he said. Coupled with its strong brand, its — which consistently ranks in the top 15 in terms of traffic — and its strong management team; now was as good a time as any to test the waters.

“It's only logical for an independent company, given all that good news, to explore what the marketplace may have to say,” said Anstrom, a former CEO of The Weather Channel Cos.

According to the Times, media giants such as News Corp., NBC Universal and Comcast have all expressed interest in the channel. Anstrom would not speculate as to what price the network might attract. The Times said that it could be as high as $5 billion.

“In general, I would always say on valuation that more is better,” Anstrom joked.

At least one analyst believes that attracting $5 billion for the network is not far off the mark.

Although that would make the deal one of the more lucrative in recent years — Oxygen sold to NBC Universal in October for $925 million, BET sold to Viacom for $3 billion in 2000, and Bravo sold to NBC Universal in 2003 for $1.25 billion — Miller Tabak media analyst David Joyce said those deals were primarily for niche channels. The Weather Channel appeals to a much broader audience — it is in 97% of U.S. TV households and is watched by 269,000 viewers at any given time of day — and has much higher brand recognition, the analyst said.

“I think $5 billion is achievable,” Joyce said.

SNL Kagan analyst Derek Baine said the bulk of the $5 billion valuation would fall to He estimated The Weather Channel network generates about $110 million in annual cash flow, implying a $1 billion to $1.5 billion valuation based on historic 10- to 14- times cash flow multiples for cable networks. He estimated would generate revenue of about $130 million this year — more than 40% of what the cable channel generates — and predicted the site would be worth about $3.3 billion to a strategic buyer.

“Any traditional media company would be frothing at the mouth to have their new media assets on track to do almost half of what their old media properties do,” Baine wrote in an e-mail message.

According to Nielsen/Net Ratings data, is the 18th largest media web site by traffic and had more than 32 million unique visitors in November. Oppenheimer & Co. analyst Tom Eagan estimated that could be worth as much as $2 billion.

Still, Joyce believes that a bidding war could erupt for the channel, adding that other media companies like Liberty Media, The Walt Disney Co. and Time Warner Inc. could join the other prospective bidders.

“I continue to believe that cable networks, whenever they come up for sale, are going to be hotly contested because you can get dual revenue streams — advertising and affiliate fees,” Joyce said. “There are a lot of synergies when you have a few able networks to get more and more because it gives more negotiating power in carriage-fee negotiations.”