Weather .com And Business Sold For About $3.5 billion

companyone · Jul 6, 2008

NBC Universal, Bain, Blackstone Buy Weather Channel ~ Weather .com
The purchase price was about $3.5 billion, according to a person who asked not to be identified because the terms weren't made public.

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NBC Universal, Bain, Blackstone Buy Weather Channel (Update1)

By Sarah Rabil

July 6 (Bloomberg) -- NBC Universal and buyout firms Bain Capital LLC and Blackstone Group LP agreed to buy the Weather Channel, after Landmark Communications Inc. put the cable network up for sale earlier this year.

The purchase price was about $3.5 billion, according to a person who asked not to be identified because the terms weren't made public. The channel will be based in Atlanta and management will be provided by NBC Universal, the companies said in a statement.

NBC, owned by General Electric Co., adds a cable network that reaches 96 million households and can bolster the company's own NBC Weather Plus channel and Web site. Landmark's Weather .com drew 36.4 million U.S. viewers in May, according to Reston, Virginia-based researcher ComScore Inc., making it the 15th most-popular Internet property. NBC sites, excluding iVillage .com, didn't rank in the top 50.

``It could embellish their presence,'' said James Goss, an analyst with Barrington Research in Chicago, in an interview before the announcement. The deal also removes the Weather Channel as a competitor, he said.

Representatives of the buyers declined to comment beyond the statement, while Landmark spokesman Richard Barry couldn't be reached for comment.

Final Bidders

Landmark hired JPMorgan Chase & Co. and Lehman Brothers Holdings Inc. in January to seek buyers for the Weather Channel and review options to boost the value of the entire Norfolk, Virginia-based company. Owned by the Batten family, Landmark has said the entire company may be broken up and sold, including its newspapers and TV stations.

GE, based in Fairfield, Connecticut, rose 40 cents to $26.91 in New York Stock Exchange composite trading on July 3. The shares have fallen 27 percent this year. Blackstone, the New York-based firm that went public at the peak of the takeover boom last year, fell 9 cents to $17.23. The stock is down 22 percent this year. Closely held Bain is based in Boston.

NBC, based in New York, and the buyout firms became the lone contenders after Time Warner Inc., the world's largest media company, dropped its bid on June 13. The same day, Landmark said it was in ``exclusive talks'' with the NBC-led group. The Batten family initially sought as much as $5 billion for the channel and Web site, the New York Times said May 31.

Station Sales

Weather .com, created in 1995, syndicates its current conditions and forecasts to more than 100 million users of News Corp.'s MySpace. The Weather Channel also runs sites for vacation rentals, climate-change discussions and international weather.

Weather.com is ``the most highly coveted asset in the Landmark transaction, as the Web site is likely to serve as the growth driver moving forward,'' Lehman analysts Anthony DiClemente and Vijay Jayant wrote in a January report when the sale was announced.

Landmark has said it plans to sell separately its CBS- affiliated TV stations in Las Vegas and Nashville, Tennessee.

Started in 1982 by billionaire Frank Batten Sr., the Weather Channel provides 24-hour programming. The network, with about 110 meteorologists among its 800 employees, started a high-definition channel in October.

Landmark had $1.75 billion in sales in 2006 and 12,000 employees, according to Hoover's Inc. The company doesn't release earnings.

Newspaper Ownership

Batten, a Norfolk native, took over as publisher of the Virginian-Pilot newspaper in 1954 at age 27 and proceeded to build Landmark Communications. He stepped down as chairman and chief executive officer of Landmark in 1998, handing the positions to his son, Frank Batten Jr.

Landmark also owns the Roanoke Times in Virginia and the News & Record in Greensboro, North Carolina.

Deutsche Bank AG acted as the lead financial adviser along with Allen & Co. and Credit Suisse Group AG for NBC, Bain Capital and Blackstone. Weil Gotshal & Manges LLP and Ropes & Gray LLP were legal advisers. Deutsche Bank, GE Commercial Finance Ltd., GSO Capital Partners LP and Sankaty Advisors LLC will provide the debt financing for the transaction.

JP Morgan was Landmark's financial adviser; Willcox & Savage PC and Kilpatrick Stockton LLP represented the company, while Skadden Arps Slate Meagher & Flom LLP advised on tax and other specialty issues.

To contact the reporter on this story: Sarah Rabil in New York at srabil @ bloomberg.net.
Last Updated: July 6, 2008 16:38 EDT