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Weather Channel Boosts Bottom Line for New Owner

The Weather Channel is a locomotive in Entertainment Studios’ portfolio of businesses generating sizable cash-flow profit, enlarging entrée to advertisers because of its heft and, in what is often unappreciated by outsiders, serving as a media-technology engine.

To keep the Weather Channel cable network relevant in an era when information is readily available online and via personal devices, the linear basic cable network jazzes up its presentation with flashy media tech. Weather Channel serves up immersive mixed reality and augmented reality — layering digital images into real-world presentations as in in-studio weather telecasts.

The Weather Channel also delivers a dose of story-telling, weather news in broader context and connections to experts, which keeps audiences tuned in, says Janice Arouh, who is president-network distribution and marketing at Entertainment Studios Networks. The audience “wants to know more than just it’ll be sunny and 83 degrees,” Arouh says. “They want a deep dive into the ‘explainers of weather’ in their community, the story of the weather that will impact them and the imminent dangers presented by severe weather.”

Byron Allen-led Entertainment Studios acquired the Weather Channel in March reportedly for $300 million and the basic cable channel is the flagship within its Weather Group division. Associated digital properties including weather.com were not included and are owned by IBM, from which Entertainment Studio licenses the brand, data and analytics under a long-term contract. Today, Entertainment Studios-owned Weather Channel cable network, which launched in 1982, is headquartered in Atlanta and has 400 employees.

The Weather Channel is succeeding as an economic proposition, according to Derek Baine, research director for media and communications/Kagan at S&P Global Market Intelligence. “It’s a cash cow and has a good market presence,” though subscriber count is slowly eroding under the industry trend of cord-cutting, Baine says. The Weather Channel generated $346.8 million in aggregate revenue in 2018, mainly from advertising sales and channel carriage fees paid by cable/satellite TV platforms, according to Kagan Estimates from S&P Global Market Intelligence. S&P figures that its carriage fees ticked up slightly to 16 cents per subscriber per month, which is an achievement as cable/satellite systems negotiate to grind down per-sub fees as cord-cutting squeezes industry economics.

Total subscriber count is slowly drifting downward to 79.8 million U.S. cable/satellite TV subscribers in 2018, although overall revenue is holding steady, according to S&P. The only major multichannel TV platform not offering the Weather Channel is Verizon’s FiOS, though Entertainment Studios says it working on getting a carriage deal.

The Weather Channel’s TV audience grew by several metrics in 2018, benefitting from a rash of bad weather and what insiders feel is improved inclement-weather coverage. The cable network consistently tops consumer surveys (its main rival as a linear basic cable network is AccuWeather Network). The Weather Channel received its first national news and documentary Emmy nomination last year for its breaking coverage of Hurricane Harvey.

Programming is more than weather reports, with original TV shows such “Heroes & Survivors” in extreme weather, clip show “Weather Gone Viral” and “SOS: How to Survive” starring Creek Stewart. Those reality shows are stripped across evening time periods and weekend afternoons. Weather Channel senior vice president-content and programming Nora Zimmett says the series have a common denominator of being “character driven with the weather coming to get you.”

Entertainment Studios is planting Weather Channel businesses in digital, since IBM owns its original package of digital assets. Weather Channel sends customized over-the-top content streams though its 3-year-old “Local Now” initiative that is geo-targeted and connects to the millennial audience demographic. In August, its @Pattern weather initiative launched on Twitter to “tell science, climate change and nature stories,” says Zimmett. And finally, there’s fan engagement tool WeLoveWeather.com, though it’s not designed to be a monetized venture.

Pundits caution that the tsunami of basic weather information available on-demand via smart phones threatens the linear TV channel franchise, but Weather Channel insiders disagree, saying lively presentation with cutting-edge media tech, story-telling and human expertise will continue to wow audiences. Competition for weather info via “an app is nothing more than a score card,” says Arouh. “It just tells you a number.”

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