Climate change for Weather Channel sale
Landmark may need to lower expectationsPrivately held Landmark Communications likely will have to lower its expectations for the Weather Channel, with Time Warner and the team of NBC Universal and private-equity firm Blackstone Group looking like the only suitors remaining as second round bids were due Friday.
The bidders were expected to offer $3 billion-$4 billion each for the cable channel, down from the $5 billion originally earmarked by Landmark, the Wall Street Journal reported.
The newspaper also cited a range of other possible bidders. However, sources said that CBS Corp., News Corp., Liberty Media, Viacom and Comcast were not planning to submit bids, even though some had been looking at the channel.
Landmark vice chairman Richard Barry and representatives for all the possible suitors declined comment on the auction.
Sources said the high asking price for the Weather Channel, a lack of synergy and different corporate priorities had caused the field of suitors to thin out since a first round of bidding in March. Potential suitor CBS Corp. said this month that it will acquire digital media company CNET for $1.8 billion, reducing its interest in another major deal.
NBC Universal is expected to combine the Weather Channel with its digital weather network NBC Weather Plus if it wins the auction. A deal also would add to NBC Uni's fast-growing cable networks unit.
TW could find opportunities to cross-promote the Weather Channel with its CNN news powerhouse. Both networks are based in Atlanta, which would allow for cost savings.
TW CEO Jeffrey Bewkes will add $9.25 billion to the conglomerate's war chest in the spinoff of Time Warner Cable, which is expected to close in the fourth quarter. With TW's new focus on content assets, Bewkes said cable networks would be "a good area for us" for acquisitions.
The Weather Channel has more than 96 million U.S. subscribers, meaning it reaches more than 97% of U.S. cable TV homes.
A sale of the network for $3.5 billion-$4 billion would value the Weather Channel at about $35-$40 per subscriber. NBC Uni paid $22 per subscriber for Bravo in 2002 and less than $12 per subscriber for Oxygen last year. Cablevision Systems recently agreed to acquire the Sundance Channel for about $19 per subscriber.
Blackstone Group is one of the owners of THR parent The Nielsen Company.
Paul J. Gough and Reuters contributed to this report.