Is Weather Channel Worth $5 Billion? Round 2

Peter Kafka | January 4, 2008 9:45 AM

Breaking Views takes another crack at the $5 billion asking price for The Weather Channel and its website, and estimates that parent company Landmark is asking 20x ebitda multiple, "well above Yahoo's and more than twice Discovery's".

That leaves us more confused than ever. Yesterday Michael Learmonth pointed out that last year NBC U bought Oxygen for $12 a sub, a rate which would value Weather Channel at $1.1 billion. If you argue that Weather Channel is a core cable offering -- must-see viewing for a niche audience, and occasional viewing for a larger audience --  perhaps you can double or triple that. So optimistically you're valuing Weather.com at $2 billion.

Is that realistic? Without better insight into Weather.com's business, we don't know. But we are skeptical: More so than any other news niche, weather information is a commodity. Do you know who provides the weather news you rely on? We're partial to Google's weather (punch in your area code or city name and "weather" into the search box, and voila!), and we have no idea who's generating that. Weather.com is undoubtedly a valuable URL, but beyond that, not sure what the site offers that isn't easily duplicated or displaced.

Are we missing something?

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mediaman said:
I would love to see weather.com signup with the Quantcast unique user tracking system. I would be curious to how strong of a lead they really have over their two largest competitors, wunderground.com and accuweather.com. I made the switch to wunderground years ago.
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idaytrip said:
The technology that is not being considered is the ability to direct targeted ads to very specific areas of the country using the Intelistar system. This allows them to send commercials based on any criteria triggers automatically (weather, pollen, temp, demographic) through a their own infrastructure. There is no other network that can offer this granular marketing. And if this technology is licensed, it will be a huge win for any company.
Garbanzo said:
Hey, The Times bought About.com, which was zero useful content and 32 million monthly uniques driven by not much more than great SEO, for nearly $500 million. Weather.com is a much better deal in terms of traffic and audience quality. Let's say the web operations alone are worth $1.5 billion. Throw in another $1 billion for the broadcast ops, and that gets you to $2.5 billion
Garbanzo said:
Hey, The Times bought About.com, which was zero useful content and 32 million monthly uniques driven by not much more than great SEO, for nearly $500 million. Weather.com is a much better deal in terms of traffic and audience quality. Let's say the web operations alone are worth $1.5 billion. Throw in another $1 billion for the broadcast ops, and that gets you to $2.5 billion
Michael Learmonth said:
It's a hefty price but since you can't buy that kind of traffic, what do you supposed it would be worth to NBC U to immediately gain scale on the web without relying on cumbersome ties to Microsoft? Probably a good bit. And there are more than a few who might consider it worthwhile to keep weather.com out of the hands of a competitor.
shanan said:
One point that the Times touched upon was TWC's online businesses, which are among the healthiest of any traditional media business. Note the breadth of syndication deals (with Yahoo, etc) and then note the mobile presence.

The Weather Channel is a strong success story for ubiquitous distribution across all mediums.

But you're right, that still doesn't get you to $5b

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