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Marianne Paskowski



Field of Buyers Shrinks for Weather Channel

May 16, 2008 12:02 PM

CBS and NBC, once thought to be the lead dogs to acquire the Weather Channel from Landmark Communications, priced at a steep $5 billion, probably are out of the race now.

At least I think so. Just this week, after his $1.8 billion acquisition of CNET Networks, CBS czar Les Moonves said there were no other large acquisitions ahead for the company.

Then General Electric, the parent company of NBC, confirmed its appliance division was on the block. GE honcho Jeffrey Immelt hopes it will fetch $5 billion to $8 billion.

The 100-year-old appliance division, a mere sliver of the company, is probably one of several divisions that are likely to go on the auction block, say Wall Street analysts. GE is suffering from severe cash flow problems. That doesn’t bode well for the Weather Channel.

So that leaves Comcast, the multiple-system operator that desperately needs a strong network to buoy its sorry stable of cable networks.

Also still in the race is Time Warner. And that’s my horse in this race.

That because Time Warner owns the Turner networks. And according to one of my sources, Turner has tried many times to buy the Weather Channel, for a much lower price, because it would complement CNN perfectly.

Also the Turner networks are based in Atlanta, as is the Weather Channel and its seasoned forecasters.

So who’s your horse in this race?


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Comments (16)

Arthur :

Marianne,

I think you're writing off NBCU prematurely. They might hold on to the appliance division AND purchase the weather channel. I don't know about you, but I'd love to own a convection oven capable of displaying Doppler Radar. But then, if you can't take the high pressure area, you'd best stay out of the kitchen.

Best,

Arthur

Marianne :

Arthur,
You could be right, but Immelt, and you didn't mention this has not been able to move the stock in seven years.

Immelt said that a sale, a partnership, or perhaps if it, the appliance division, doesn't fetch the right price, GE would keep it.

GE's biggest problem is that it has a severe cash flow problem. The Street is paying more attention to cash flow than any other metric, like Beta scores (risk), dividends, or P/E (value).

GE has become a hydra-headed monster and is rebuilding itself as a company of the future. It dabbles in everything, including wind farms.

Long term, that's good, now it's the house of pain.

Always interested in your thoughts,

Thanks,
Marianne

Robert Keil:

You're right Marianne...Turner seems like a No-Brainer with the ATL connection. Another one could be Disney/ABC. Can you say "College GameDay Forecasts?"

joe:

Not that Comcast and Turner don't make sense, but I also wouldn't count out NBCU either - yet. If there is one thing you can always count on, it is weather. And think about all the digital possibilities that come with that. Those are worth so much more than the TV channel.
That being said, GE appliances would generate some cash flow - even though it is a measly 4% of GE revenue.

Marianne :

Hi Robert,
Hmm. I don't think so about Disney. You know I kind of forgot about Rupert Murdoch, Fox News. I still bet on Time Warner.

Thanks for your post,

Marianne

Marianne :

Joe,
Maybe I'm wrong, I think it happened once. I just don't see GE having the cash flow to boost a buy of Weather. They're still digesting the purchase of Oxygen.

About GE appliances, maybe $5 billion tops, a drop in the bucket and doesn't solve the cash flow problem.

We shall see, won't we Joe,
Marianne

Jeff Mulligan:

Marianne --

I don't know about the price, but the property looks pretty good to me. A bit stodgy, perhaps, but the only network with in-depth weather at this time, and with a dynamite brand name, only needs a little more pizazz and creativity to make the $5-8 billion price look attractive. Expect lite of potential buyer interest.

The winners in business buy based on what they anticipate building, not on the basis of what's now created by unimaginative managers.

Jeff

Marianne :

Hi Jeff,

You got the GE appliance price mixed with the Weather Channel cost. Weather is looking for $5 billion. Ge's appliance thingy is looking for $5 to $8 billion?

Isn't that something, TWC going for the same price as GE? That tells me a lot.

Be well, Jeff,

Marianne

Andy S.:

"Isn't that something, TWC going for the same price as GE? That tells me a lot."

You might say that they're both being hung out to dry.

Marianne :

Andy,

Hold the phone here. GE appliances, just a sliver of the corporation is going for a $5-8 billion price.

The company has so many other sector plays, including NBCU and wind farms. I find it impossible to evaluate this mess.

So why exactly does this tell you a lot? I guess I'm surprised that the GE appliance sale is so undervalued. Don't we all have a GE appliance of some sort in our homes?

But, media stocks are also undervalued, and that's why I think GE will wind up with the Weather Channel.

Marianne

QT:

Cox Should buy The weather Channel and merge it with the Travel Channel that would be a a great group of Networks like CNN and Headline News,TBS and TNT
the other compainies need no other networks all they will do is recycle the same trash of Programs like do with the networks they got, go COX bring out the Billions!

Marianne :

QT.

Don't think Cox is a buyer, even though it too is based in Atlanta.

I'm still betting on Time Warner. We're probably all wrong because if Weather doesn't get its price, it could just take its bat and ball and go back home.

Thanks for the post, hadn't really thought of Cox.

Marianne

Personally, I would like to see The Weather Channel remain a stand alone entity.

They have been something to watch from their content development over the years, to the building of their enterprise.

Turner/CNN will low ball a purchasing price offer and the market place just isn't liquid enough right now to write a check for five billion.

Side stepping a sale, the operation will only grow.

New bosses will, no doubt, screw with the successful formula that got TWC to where it is today and that would be a big loss.

If some of the principles want to leave the game and cash out, then I guess a sale is inevitable.

Casa-ra-sara.
Peter Bright

Marianne :

Peter,
Here's a thought, maybe the Weather Channel is no longer the kingpin it was. People have so many choices to get their weather news from today.

Where I live, Cape Cod, the weather tends to change every 5 miles, so even if I type in my zip code on weather.com, it's always way off.

Local on the 8's is even worse, out here. I'd rather go to the Capl Cod Times online, or listen to a local radio report.

Still think Time Warner's Turner is the best fit, if both parties can meet an agreement.

Best,
Marianne

Marianne :

Thanks Joe, saw that this morning. Still a jump ball. And check out the bids, a tad shy of $5 billion I would say, only $3b or $4b.

Thanks for the link, I'm chasing other fires.
m

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