$300M acquisition adds network to ES’ cable roster

Buying The Weather Group, which includes The Weather Channel, for what sources pegged as $300 million, Byron Allen intends to use it as part of his quest to take his fast-growing company, Entertainment Studios, worldwide.

“Our goal is to make [The Weather Channel] global on every device,” said Allen, founder, chairman and CEO of Entertainment Studios, which he wholly owns.

The private purchase, which includes The Weather Channel and the Local Now streaming service, does not include website weather.com. IBM owns that as part of its $2 billion acquisition of The Weather Co. in 2015. Blackstone, Bain and Comcast/NBCUniversal bought the Weather Group in 2008 for about $3.5 billion.

“We bought the network because it’s the No. 1 weather news network in the country by far,” Allen told B&C as snow blanketed the East Coast and rain poured in Los Angeles. “It’s needed, it’s vital, it’s necessary for the protection of our families and our lives. It’s one of few cable networks you can say that about.”

The network is currently in 81.2 million households, per Nielsen estimates, and has distribution deals with virtually all major MVPDs, who (according to Kagan) paid an average of 15 cents per subscriber for it in 2017. One notable exception is Verizon Fios, which dropped the network in 2015. The Weather Channel has had mixed success on the over-the-top front, securing carriage on DirecTV Now and Fubu TV but failing thus far to reach deals with Sling TV, PlayStation Vue or YouTube TV.

In 2017, Kagan expected the channel’s cash flow to grow to $145 million, from $132.8 million in 2016. Kagan said the channel’s ad revenue would rise 7% to $156 million, after peaking at $163.7 million in 2012.

TWC’s strength remains being able to provide up-to-the-minute coverage of severe weather developments. Live news and sports programming remain big draws for linear cable networks as consumers migrate to on-demand streaming services.

TWC averaged slightly less than 200,000 viewers through the first two weeks of March, even as a string of nor’easters hit the East Coast. But last September, during the height of Hurricane Irma, The Weather Channel averaged 2.2 million viewers to finish among the top three most-watched networks on cable for the week of Sept. 3, 2017.

Allen intends to deploy the Weather Group’s assets to expand his business on all fronts. The Local Now streaming service has 4,000 boxes located in cable headends across the country, enabling locally targeted advertising to run in news, weather and lifestyle content broadcasts.

“There’s a lot that can be done in partnership with local television stations and content producers,” Allen said. “This is really a digital play, which gives us a global footprint. Now for the very first time we can be local, national and global.”

He said he doesn’t intend to make any management changes at the Weather Group: “We just want to enhance their position.”

Allen started Entertainment Studios 25 years ago selling syndicated programs, but has since expanded into theatrical films, releasing such movies as 47 Meters Down.

ES now owns eight cable TV networks, the others being Pets.TV, Comedy.TV, Recipe.TV, Cars.TV, ES.TV, MyDestination.TV and JusticeCentral.TV. The company announced a plan to launch Sports.TV, a direct-to-consumer streaming service, aggregating independent sports networks onto one platform, this year.

Still, Allen just wants The Weather Channel to keep on doing what it does best.

“We are not looking to add Entertainment Studios content to [The Weather Channel],” Allen said. “It’s already best-in-class as a weather news-gathering service with no infomercials. We are just here to help them win even at a higher level.”

Jon Lafayette contributed to this report.

Buying The Weather Group, which includes The Weather Channel, for what sources pegged as $300 million, Byron Allen intends to use it as part of his quest to take his fast-growing company, Entertainment Studios, worldwide.

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