As my colleague Peter Krasilovsky discussed in his write-up this morning, the purchase of The Weather Channel by NBC Universal and partners is getting a lot of press attention for several reasons:
- At $3.5 billion, the price is substantially less than the $5 billion the owner, Landmark Communications, had hoped for. As such, this demonstrates “how depressed media assets have become,” according to The Wall Street Journal.
- The deal is being financed by NBC and two major private equity players (Bain Capital and The Blackstone Group). This type of arrangement is said to be the wave of the future for big deals, now that banks have drastically reduced their participation in them.
- The prize in this Cracker Jack box is The Weather Channel’s online assets. The leading online property, Weather.com, enjoys 37 million monthly uniques. It’s also expected that NBC will use Weather Channel content to boost its other Web sites, such as MSNBC and NBC News.
Now, why should the TKG audience care about this?
Simple: Weather is an extremely local subject. One of the first things Weather.com visitors sees on the site is a box in which they enter their ZIP code to get the forecast for their home city or travel destination. (Overlaying the ZIP code with the user’s IP address helps determine if they’re in their home city or not.)
To date, most of the ads served up on Weather.com are national. Going forward, however, we think weather-related Web sites will be attractive places to reach local audiences.
Investment sidebar: If you believe global warming is real and here to stay, investing in the leading weather-themed media property is also a great way to “go long” on global warming. Weather news is going to become increasingly valuable as the weather becomes increasingly newsworthy and, dare I say it, withering.