The Weather Channel Companies

views updated

The Weather Channel Companies

300 Interstate North Parkway
Atlanta, Georgia 30339
U.S.A.
Telephone: (770) 226-0000
Web site: http://www.weather.com

Wholly Owned Subsidiary of Landmark Communications, Inc.
Incorporated: 1981
Employees: 900
Sales: $302 million (2000 est.)
NAIC: 513210 Cable Networks

Through cable TV, radio, and Internet operations, The Weather Channel Companies provide around-the-clock weather information. The Weather Channel, Inc., the U.S. network, reaches more than 95 percent of cable homes in the United States, or more than 84 million subscribers among cable and satellite dish users. Led by USA Today, more than 60 newspapers with a combined circulation of eight million carry weather news from The Weather Channel. The channel gets high ratings in the early mornings and in times of severe weather.

With 350 million page views a month, weather.com is the Web’s leading weather provider. The company broadcasts to nine million subscribers in Latin America and offers global weather information through language-specific sites there and in Europe. Through a joint venture, The Weather Channel owns half of Canada’s The Weather Network.

Origins

John Coleman had a dream. A meteorologist for ABC’s Good Morning America, he believed in the public’s appetite for weather information. The market existed, he knew, for an around-the-clock weather channel. He had a difficult time, however, finding other believers. TV weather was at that time limited to three-minute spots on local news—something ACNielsen had never even measured.

After unsuccessfully shopping his idea to many major media companies, Coleman eventually caught the ear of Frank Batten, Sr., chairman of Landmark Communications, a privately held media conglomerate based in Norfolk, Virginia, that owned newspapers, and TV and radio stations. Batten liked to sail and was perhaps more attuned to the weather than most people. He also knew that cable operators were eager for content, and that their local weather information was primitive.

In his 2002 chronicle, The Weather Channel: The Improbable Rise of a Media Phenomenon, Batten recalled the July 1981 press conference where he announced his exciting new concept: just weather, 24 hours a day. Few of the unimpressed journalists in the room would have predicted that in 20 years their colleagues would be referring to the company as a “cash cow” or “media phenomenon.”

About $40 million was raised to launch the network. The start-up costs were considerable. John O. “Dubby” Wynne, former corporate counsel and head of broadcasting at Landmark, engineered many of the deals that brought the company into existence. The Weather Channel (TWC) acquired a lease for a scarce transponder on the dominant Satcom I satellite at a cost of $10.5 million. The company also had to convince the National Weather Service to standardize its forecasts at its 500 local stations. In addition, the company needed to develop equipment to allow cable operators to pull the appropriate local weather information from the satellite signal.

TWC was headquartered in the Cumberland Mall area northwest of Atlanta. The city was chosen for a number of reasons, including a reliable ABC satellite uplink allowing Coleman to fulfill his contract with Good Morning America. The city’s temperate weather was another factor.

The Weather Channel first went on the air on May 2, 1982—a date that coincided with the beginning of the National Cable Television Association’s annual conference in Las Vegas. The first studio, dubbed the “Weather Closet,” measured just 15 feet by 15 feet. A lightning bolt zapped the channel’s transformer in 1983, keeping it off the air for five hours.

In the same year, a financial crisis almost kept the channel off the air for good. It was resolved by having cable operators pay a fee to carry the programming. Although TWC became one of the most visited (if briefly viewed) cable channels, advertising revenues were simply not paying all the bills. In January 1984, TWC began charging cable systems a monthly fee of five cents per basic subscriber.

Advertisers were slowly warming up to the TWC concept, especially those with a weather-related angle to their products. Makers of batteries, hot beverages, and cold medicines adored the channel during the winter. Michelin’s famous baby-in-a-tire ads got plenty of airing during rainy weather.

During episodes of severe weather, such as during the blizzard of March 1993, TWC could momentarily best its giant Atlanta neighbor, CNN, in the ratings. TWC also helped popularize hurricane tracking as something of a national pastime, broadcasting coordinates every ten minutes. By this time, TWC was carried on 5,000 cable systems to 54 million subscribers. It had 400 employees, including 52 meteorologists and 32 news anchors.

Storming the Internet in 1995

TWC got onto the Internet early. It became CompuServe’s weather provider in February 1995. The first version of weather.com, TWC s own web site, launched a couple of months later. Company President Michael Eckert reckoned, however, that TWC had a thousand competing sites, mostly poor quality ones. As most of TWC s weather data, being obtained from the National Weather Service, was public domain, Eckert aimed to differentiate The Weather Channel’s web site with good visual design and constantly updated, detailed information. This required a considerable outlay in technology. Soon, the site was presenting this info via 3-D weather maps and animation. By mid-1996, the web site was logging four million hits a week.

The company’s cable TV programming also was evolving. In 1995, TWC began featuring live reports from the field. The audience was growing at more than 25 percent a year. Ad revenues topped $40 million, while subscriber fees were estimated at $48 million. The company also was rolling out weather-related CD-ROMs, videos, and books.

In the United States, the channel rolled out a series of witty ads aimed at appealing to weather fanatics. The ads portrayed patrons of a sports bar watching The Weather Channel, cheering “Warm Front” vs. “Cold Front.”

European versions of The Weather Channel debuted in mid-1996. As part of its international expansion, The Weather Channel acquired a 50 percent stake in Toronto-based Pelmorex, which operated a Canadian cable weather network, in September 1996. Pelmorex CEO Pierre Morrisette retained voting control.

Growing fast, TWC by mid-1997 had 400 employees at its metro Atlanta headquarters. The company moved its sprawling operations into one eight-story building. It also upgraded to digital production and broadcast technology.

The company faced new competition from MSNBC Weather, a satellite dish service that did not last very long. Competition in Europe was tougher. The Weather Channel also had to deal with meddlesome governments, often with media interests of their own. Although The Weather Channel’s four European channels attained more than 20 million subscribers, they were shut down in January 1998.

Michael J. Eckert, one of the company’s cofounders and its CEO since 1985, stepped down in March 1999. He told the Atlanta Journal and Constitution that for the channel to succeed in the new millennium, it needed to be five things: “Personalized, customized, convenient, fast and portable.”

Decker Anstrom, previously head of the National Cable Television Association, became The Weather Channel’s next CEO. Just two years later, he was named president and chief operating officer of parent company Landmark Communications, while retaining the CEO spot at The Weather Channel, which was Landmark’s fastest-growing and most profitable business, according to the Atlanta Journal and Constitution.

The company’s 1999 revenues were estimated by one source at $185 million, with operating profits of $70 million. The Weather Channel: The Improbable Rise of a Media Phenomenon, however, put TWC’s share of Landmark’s $790 million in 2000 revenues at $302 million.

In the fall of 1999, The Weather Channel became the preferred weather provider for America Online. About the same time, it began transmitting its Weatherscan Local service to a Time Warner cable system in Memphis via the Internet. Weatherscan Local, which provided all-local, all-the-time weather info on digital cable systems, was rolled out nationally in March 2002. It had 3.5 million subscribers within a few months.

The Weather Channel’s parent company, Landmark Communications, acquired Weather Services International (WSI) in February 2000 for $120 million. WSI, based in Massachussetts, provided weather information and graphics for TV stations. The Weather Channel had long used WSI to handle National Weather Service data.

Weather.com, which began with “one meteorologist, one IT person and one marketing person, all working part time,” had a staff of 140 in 2000. It had expanded beyond simple weather statistics into travel and even vacation information.

Company Perspectives:

TWC Mission: We will be the indispensable source of weather and related information that helps consumers prepare for and understand the weather and how it affects their lives. TWC Vision: To make a difference in people ’s lives one forecast at a time.

The Weather Channel, which was unchallenged for 20 years, began to get some direct competition in late 2000, when WeatherPlus arrived on the scene. WeatherPlus started with broadcasts in The Netherlands, but was headquartered near Philadelphia and had its operations center in The Weather Channel’s Atlanta backyard. AccuWeather, a long dominant forecasting service for radio stations and local broadcast television stations, also competed with The Weather Channel on the Internet, via hundreds of sites, including CNN.com and MSNBC.com. The Weather Channel resumed efforts to expand overseas, but began using an Internet-only strategy.

Getting Emotional in 2001

In 2001, TWC began a “Live by It” advertising campaign emphasizing the “emotional connection” its broad audience felt toward it, hoping to encourage them to use it more frequently by seeing the channel as a “trusted and caring friend instead of just a box of meteorological data,” wrote the Atlanta Journal and Constitution. The emphasis switched from the-weather-as-the-star to the connection between weather and the viewer’s life, said the company’s marketing people. The anchors were being groomed for personality and energy; more video of people active outdoors was being incorporated into the programs.

The company quadrupled its promotional budget to more than $20 million for 2001. New programs such as “Your Weather Today,” a morning show for working women, began airing. Another, “Storm Series,” aired in prime time and profiled encounters with dangerous weather.

As its online unit struggled to attain profitability, The Weather Channel cut 18 jobs there and in the Latin American operations. The company employed 900, including 120 meteorologists.

Bill Burke, a former executive at the Turner Broadcasting System, became The Weather Channel’s next president in February 2002. In the spring of 2002, The Weather Channel cross-promoted its five-part “StormWeek” series with the A&E network, which was airing a two-part movie called Shackleton about a 1914 expedition to the South Pole. The two channels reached a similar audience; both were strong in the age 25 to 54 demographic.

TWC s ratings continued to be most affected by the weather itself. Tropical storms Isidore and Lili led a record 2.9 million users to weather.com in late September 2002, while the Latin American site and The Weather Channel cable network both doubled their usual audience.

Principal Subsidiaries

Pelmorex, Inc. (Canada; 50%); The Weather Channel, Inc.; Weather Services International.

Principal Divisions

The Weather Channel, Inc.; The Weather Channel Radio Network; Newspaper Services; The Weather Channel International; weather.com; The Weather Channel New Media and Interactive TV.

Principal Competitors

AccuWeather; WeatherPlus.

Key Dates:

1982:: The Weather Channel is launched.
1985:: Revenues from cable operators exceed those from advertisers.
1986:: TWC switches to an anchor format.
1995:: Weather.com is launched.
1997:: TWC moves to a new facility.
1998:: TWC enters the top dozen cable networks, reaching more than 70 million subscribers.
2001:: The “Live by It” campaign promotes viewers’emotional connection to TWC.