ANALYSIS: Landmark’s Anstrom Defends TWC’s $5B Price Tag
Landmark Communications CEO Points to The Weather Channel’s Web Site, Brand, Mobile Product
By Anne Becker -- Broadcasting & Cable, 1/3/2008 6:34:00 PM
Reports Thursday that The Weather Channel is on the market for as much as $5 billion left analysts divided on the value of the network. But Decker Anstrom, president and CEO of Landmark Communications, TWC’s parent company, maintained that the $5 billion is “fair” given the network’s valuable online and mobile properties.
Privately held Landmark projected that TWC and its digital assets will post double-digit profit for 2008 and beyond. TWC also operates a top-15-trafficked site. In an interview with B&C, Anstrom said the price tag, reported in Thursday morning’s New York Times, was an accurate reflection of the network’s starting value.
“If you looked at the current profitability and future growth prospects, you’d conclude that that’s a very fair starting point in terms of our businesses,” he said.
Virginia-based Landmark said Thursday morning that it retained JP Morgan and Lehman Bros. to explore the sale of its assets. Aside from TWC, they include CBS-affiliated broadcast stations in Nashville, Tenn., and Las Vegas; three metro dailies and a slew of community newspapers; an Internet marketing unit; and managed data-network service.
The $5 billion seemed high to some analysts, who did not want to be quoted. They pointed to TWC’s comparatively small annual net revenue -- some $290 million for 2007, according to SNL Kagan -- and to NBC Universal’s recent purchase of independent cable network Oxygen this fall for just $900 million.
Others said the number seemed just right. In a media world where branding is tremendously important, TWC’s name recognition and genre dominance, both on TV and in new-media platforms, is invaluable.
Unlike Oxygen, TWC is fully distributed -- in some 95 million homes, according to SNL Kagan. The 25-year-old network is now nearly fully HD and, while it has perpetually struggled to increase the length of time viewers watch, it is a must-see for breaking weather news.
Perhaps more important, Weather.com is a lucrative Web draw and an asset with an importance to Landmark that likely matches or outweighs that of the linear channel. With 34 million unique visitors in November, TWC’s Web site was the 16th-most-visited in the United States, drawing more traffic than those of Facebook, Disney, ESPN and Scripps, according to comScore.
An SNL Kagan report released Thursday said that if the company did sell for $5 billion, more than $3 billion of that would be for the Web site.
Further, TWC’s mobile application is the second-most-used in the country, behind only Yahoo Mail, and its consumer products have sold well -- a jazz CD released by the network in October is currently No. 2 on Billboard’s contemporary jazz charts.
“It’s quite a unique brand to have advertising both online and on TV, and the brand is a draw because people know to go directly there as a source of information, and they’re used to it,” Miller Tabak analyst David Joyce said. “Plus, they’ve been expanding their field of coverage, so I think that number [$5 billion] can be justified.”
The most likely TWC buyers would be major media conglomerates that could integrate the channel and its digital assets into existing cable portfolios. They include NBCU, News Corp., Discovery Communications and Comcast. Representatives from all four companies declined comment on the matter.
More lucrative cable-network sales include BET to Viacom in 2000, for nearly $3 billion, and Fox Family Channel and Fox Kids to Disney in 2001. BET went for about $38 per subscriber and the Fox channels for about $34. (At $5 billion, TWC would be selling for about $52 per subscriber.)
Independent Hallmark Channel has had tougher luck, however. On and off the market for the past several years with a $2 billion valuation, the channel hasn’t found a buyer.
But Anstrom said Landmark is at the earliest stage of exploring a sale of TWC and would be happy to hold on to the network if it did not find a buyer and a satisfactory price point.
“If this ended up with us operating it going forward, we’d be comfortable with that,” he added. “As a private company, from time to time, we review what’s happening in the marketplace in terms of what other companies are doing and, as we looked at the environment and our own business, we thought this was a good time to test the market because our businesses are very strong right now.”
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