Storm clouds are gathering over the Weather Channel

Steve Miller

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Jun 14, 2004
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Moore, OK
www.stevemillerok.com
The TV network, known for its round-the-clock forecasts and tracking of big weather events like hurricanes and blizzards, is facing a major threat to its core business--the fees it collects from pay-TV providers that carry its channel.

Verizon Communications Inc. dropped the Weather Channel last month from its FiOS TV service, which reaches 5.6 million households, citing customers' growing use of online sources and apps to look up weather information. The network is scrambling to pull every lever it can to get back on the air, including threatening not to give the telecommunications giant an unrelated Web traffic contract, according to people familiar with the matter.

Meanwhile, another battle is looming with satellite provider Dish Network Corp. The companies' carriage contract expires in coming months and the Weather Channel's backers are preparing for the possibility of being dropped by Dish, which has about 14 million subscribers, the people familiar with the matter said.

The financial outlook for parent company Weather Co. is deteriorating. Moody's Investors Service on Friday downgraded the company's debt, saying it isn't perceived by cable and satellite companies as a "must have" channel, and could therefore be dropped by more providers or face cuts in carriage fees.

All of this is raining on the ability of the company's owners--a consortium that includes private-equity firms Bain Capital LLC and Blackstone Group LP, and Comcast Corp.'s NBCUniversal--to exit the roughly $3.5 billion investment they made when they purchased Weather Co. in 2008. No formal sale process is under way, some people close to the company said.

The Weather Channel's predicament is bringing into stark relief the challenges ahead in the U.S. TV industry for independent channels--even relatively well-known ones--that aren't part of bigger media conglomerates.

As more consumers "cut the cord," or drop their pay-TV subscriptions, cable and satellite providers are increasingly looking for ways to reduce their hefty programming expenses--either by paying less for channels or dropping those that they feel their viewers can live without.

Media companies with bundles anchored by powerful channels-- Walt Disney Co. with ESPN and Time Warner Inc. with TNT, for example--can negotiate in a way Weather Channel cannot. Moody's said the environment makes it "challenging for stand-alone and smaller cable networks to maintain their subscriber base."

In an interview, Weather Co. Chief Executive David Kenny said the company has been aggressively diversifying into digital advertising and business-to-business services so it isn't so reliant on TV. Those areas combined have already eclipsed TV revenue, he said.

"I feel really supported to finish this transition that we have started, " he said. "We are on a very different path to become a data and tech company."

The immediate concern, however, is getting carriage on Verizon's FiOS service. The Weather Co. has been in talks with Verizon to purchase "content delivery network" services--essentially sophisticated Web traffic routing. But after its channel was dropped last month, Weather Co. terminated those talks in hopes of putting some pressure on Verizon, the people familiar with the situation said. Verizon has so far been unmoved.

The efforts recall Weather Co.'s tense dealings with DirecTV last year, where an unrelated business arrangement ultimately played a role in the channel securing carriage on the satellite-TV giant. DirecTV had dropped the Weather Channel for nearly three months for many of the same reasons Verizon cited. But the satellite provider agreed to carry the Weather Channel because of a separate deal it was pursuing to become the "preferred" provider for the Hilton Worldwide hotel chain, whose owners include Blackstone, also a backer of Weather Co. Hilton wanted the Weather Channel on its TV lineup, The Wall Street Journal reported last year. (People close to Blackstone said at the time that the private-equity firm didn't influence Hilton's push for the Weather Channel.)

Mr. Kenny declined to comment on any specific negotiations, but he said he no longer looks at distribution deals as pure TV negotiations. "You have to look at it as an enterprise partnership," he said.

The company's website is the leader in disseminating weather information online, with 101.5 million unique visitors in February, according to comScore. Its family of weather apps is also No. 1 in its category, with 53 million unique visitors in February. Weather Co. also sells weather information to companies in industries ranging from airlines to retailers.

Still, the TV woes threaten to put a major dent in the company's roughly $300 million in earnings before interest, taxes, depreciation and amortization, people familiar with the matter say. Already, operating profit has been slipping, a person familiar with the company's results said.

As pay-TV distributors look to control programming costs they are scrutinizing networks like the Weather Channel, which have relatively low fees. Market researcher SNL Kagan estimates the Weather Channel gets 14 cents per average subscriber a month from pay-TV distributors, compared to $6.61 for ESPN.

Some distributors have already sought out other channels for weather information, including WeatherNation, which is available in 30 million households. One of WeatherNation's investors is EchoStar Corp., which is controlled by Dish Chairman Charlie Ergen, people familiar with the situation say.

To attract new audiences, the Weather Channel moved in recent years to expand its prime-time programming lineup to include more reality shows. The company said 53% of its hours are dedicated to live weather information, while 47% is dedicated to original programming.

Nonetheless, ratings have sagged. The average number of viewers tuning in during prime-time fell 22% between 2011 and 2014 to 225,000, according to Nielsen. Since December, however, severe winter storms in the Northeast have helped increase the channel's viewership.

Comcast has collected handsome management fees from its role in Weather Co. Thus, it wouldn't need to sell at as high a price as the private-equity owners to recoup its investment--a potential complicating factor in any push to sell the company, a person familiar with the matter said.

The cable giant has the right of first refusal to acquire Weather Co., but isn't inclined to put in a bid, the person said.

Read more: http://www.nasdaq.com/article/at-the-weather-channel-gloomy-skies-linger-20150405-00008#ixzz3WUPuSoz3
 
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Reactions: Steve Miller TX
May 17, 2010
47
1
6
Savoy, IL
The environment is changing as people get their weather information from other sources. But I don't feel sorry for them, because as we know plenty of their downfall is squarely on them because of the programming decisions they have made.

I also despise the hypocrisy. Their history of bashing chasers and their methods, followed by purchasing chaser footage. I guess controversy sells, but it's gonna take more than that to save them.
 
Feb 3, 2014
38
6
11
Omaha, Nebraska
They need to go live on Sirus/XM Satellite Radio for those who are mobile when storms hit....& get rid of Sam Champion, his salary alone, would save them $$$ and I just can't stand him, so I don't watch AMHQ
 
I found out a few months ago that TWC black balled me from any and all projects or association following my comments regarding their irresponsible coverage and unprofessional behavior following several chaser-related events including the El Reno tragedy. They are obviously a little touchy about "chasertainment." Can't say much more on this ATM due to unfinished business.

I for one would not care if they simply vanished, but I do fell sorry for those who will be loosing their jobs. When they published my book and video years ago, I worked with some really fine people.

TWC lost me as a supporter years ago when they began low-balling chasers for footage. The final straw was when they fully embraced and promoted chasertainment and the "fake it till you make it" side of chasing as legitimate in 2013. I have since been told that there was some serious internal strife regarding that decision and how it hurt their image. As Andy pointed out, their hypocrisy was idiotic and a lot of people saw through it.

RIP

Warren
 
Mar 11, 2005
57
1
6
31
Mitchell, SD
53 to 47 percent? That seems way off when every time I turn to TWC there's a reality show like "Fat Guys in the Woods" airing. I don't blame them for having to put ridiculous "reality" shows like that on, but still.

I can't help but feel a little bit sad that they've declined this much though, as I grew up a Weather Ch kid...seriously...if I was at school and I knew we had a shot at severe weather anywhere on the plains that day, I couldn't wait to get home and watch live coverage for hours. I would stay glued to our small TV in the kitchen watching the coverage and keeping an eye out our window to the west to see if I could even seen the tops of the anvil crest over the horizon. #nerdprobs
 

calvinkaskey

Guest
Feb 17, 2014
384
30
11
I found out a few months ago that TWC black balled me from any and all projects or association following my comments regarding their irresponsible coverage and unprofessional behavior following several chaser-related events including the El Reno tragedy. They are obviously a little touchy about "chasertainment." Can't say much more on this ATM due to unfinished business.

I for one would not care if they simply vanished, but I do fell sorry for those who will be loosing their jobs. When they published my book and video years ago, I worked with some really fine people.

TWC lost me as a supporter years ago when they began low-balling chasers for footage. The final straw was when they fully embraced and promoted chasertainment and the "fake it till you make it" side of chasing as legitimate in 2013. I have since been told that there was some serious internal strife regarding that decision and how it hurt their image. As Andy pointed out, their hypocrisy was idiotic and a lot of people saw through it.

RIP

Warren
It seems like most media companies these days don't want to pay for footage. They think they can just find something as good online I guess, like a guy holding a shaking cell phone from 5 miles away.
 
Oct 25, 2004
568
108
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65
Tucson, Arizona
One thing I can honestly say that I'll miss about TWC if they someday go away, is hearing their trademark instrumental music waft thru my motel room at daybreak.....as I squint at the t.v. screen thru half-asleep eyes. It's been a tornado-alley daily wake-up ritual for me for decades now. So much so that when I'm back home in Arizona and I hear that music again.....I'm like a race-horse at the gate....my heart begins pounding and I start looking for the complimentary breakfast bar. Yeah....I really will miss 'em for that. Even though I've never been into storm chasing to gather and sell footage, I don't like the way they've treated my fellow chasers who do, and the recent chaser-bashing along with the "Great Tornado Hunt" has left me clenching my teeth in absolute disgust. Warren is right....the sad thing is the fact that there are some good folks there who will be out of a job.
 
Dec 13, 2003
610
62
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61
La Plata, Maryland
TWC aired not long ago their listing of the top 10 worst tornadoes. Of course it included Moore, Tri-State , Joplin, but # 10 on their list was El Reno. After a brief mention to Carl, Tim and Paul.. Just about the whole segment was talking with Bettes and showing the clip of their van rolling which showed like 5 times and what it felt like. What has really rubbed me the wrong way and maybe I'm wrong (and I hope I am) but to me they used El Reno to show how their own people were affected. This is after criticizing chasers!!Seemed hypocritical to me.