The Wall Street Journal’s Suzanne Vranika, Shalini Ramachandran, and Ryan Dezember write about The Weather Channel returning to DirecTV…
Nonetheless, DirecTV’s decision to bring the Weather Channel back to its lineup gives a boost to Blackstone and its fellow owners, Bain Capital LLC and Comcast Corp.’s NBCUniversal, which paid about $3.5 billion to acquire the business in 2008. DirecTV wanted to cut the fee it paid to carry the Weather Channel, which would likely have prompted a string of other TV providers to ask for a similar reduction. DirecTV CEO Mike White said in a public letter to customers earlier this year that the Weather Channel was worth only “one quarter of the price” the channel wanted the satellite operator to pay.
Any reduction in the Weather Channel’s fees would hurt Weather Co.’s bottom line at a time when its private-equity owners are pondering an exit from their investment. The price of Weather Co.’s debt jumped higher on news of the agreement with DirecTV, according to data provider S&P Capital IQ LCD.
If a deal hadn’t been reached, the Weather Channel stood to permanently lose about one-fifth of its potential audience. DirecTV is the second-biggest pay-TV operator, serving about 20 million subscribers.
As things turned out, DirecTV agreed to a small increase in the fees it pays to the Weather Channel, although the increase will be less than the penny per subscriber a month the channel wanted, one of the people said. The Weather Channel now receives about 13 cents per subscriber a month, estimates research firm SNL Kagan.
I’m going to score this as a win for DirecTV on points. Not an overwhelming victory but certainly better than a draw. DirecTV got the Weather Channel to offer more weather which made the channel a more attractive property from its point of view and it didn’t have to pay the amount The Weather Channel wanted. It’s a win-win for both channels but more of a win for DirecTV.