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The Weather Channel Auction Demonstrates Restraint by Potential Bidders

July 9, 2008

Analysis of:NBC, Blackstone and Bain buy Weather Channel | www.ft.com

The Weather Channel sale by privately held Landmark Communications to NBCU and private equity affiliates of Blackstone Group and Bain Capital for a reported $3.5 billion demonstrates that potential bidders such as CBS (recent buyer of CNET for $1.8b), Viacom, Liberty, and TW are being extremely careful when it comes to signficant network assets. The auction lasted seven months, with Time Warner dropping out over the price. According to Kagan's the Economics of Basic Cable Networks, TWC had $130m of Cash Flow in 2007. Other sources of income include "a top 15 web site, the No. 1 mobile content provider, the world's leading B2B weather business and the No.1 weather radar provider". According to MultiChannel News, Landmark originally sought as much as $5 billion. Reports suggest that TWC had overall EBITDA of as much as $276m, indicating a multiple of 12.5x. TWC has an outstanding brand, perishable programming, a strong web presence and multiple revenue sources.

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