NBC Universal, a division of the GE group, has agreed in principle to buy the Weather Channel for $3.5 billion. While that may seem like a great deal of money, it is important to keep in mind that the Weather Channel was originally asking a brisk $5 billion for their network.
Overall, many analysts feel that NBC is getting a good deal in the transaction; the Weather Channel has the third-highest distribution of any cable network in the United States. The deal also includes the Weather Channel’s premier web site, weather.com, which averages over 36 million unique views per month, making it the 15th most popular web site in the world.
So along with a premium cable network, NBC is also getting a solid chunk of virtual real estate that can be monetized through advertising. In fact, weather.com is such an important — and potentially profitable — web site, that many analysts feel it is worth more in the long run than the Weather Channel itself.
When you consider that, more and more, people are turning to the Web for up to the minute information, news and weather, you can see how a popular branded domain (such as weather.com) could be an absolute cash cow in the years to come. As broadcast and cable television ratings continue to slide, the average monthly visitors on the Web’s biggest sites continues to increase — in direct correlation.
Because of the trend toward receiving news and weather information online, industry observers expect the online version of the Weather Channel (weather.com) to soon become more popular and profitable than its cable TV network equivalent.
At a time when many other North American corporations are scaling back, and even laying off employees and whole divisions (GM for one example), investing 3.5 billion to purchase the Weather Channel is a bold, long-term strategy for NBC. It is also interesting to note that the deal was financed with the partnership of two private equity firms, Bain Capital LLC, and Blackstone Group LP. This suggests that the corporate credit crunch may not be as bad as many pundits have predicted.
NBC has a long history of integrating networks into its broadcast family, including Bravo and the Sci-Fi Network, among others. The company is also expanding their web presence with additions to both their CSNBC and MSNBC web sites.
The addition of the Weather Channel and weather.com gives NBC Universal a definite edge over the competition in capturing a greater viewing audience both online and off.
