The Weather Channel: Hot Enough for Ya?
(FORTUNE Magazine) – One of the obvious truths of media is that bad news draws a crowd. When planes crash, people tune into CNN. When the Dow plunges, CNBC's ratings climb. So hurricanes, tornadoes, floods, snow, hail, heat, and drought surely are welcomed at The Weather Channel, aren't they?
"No," says Decker Anstrom, stifling a laugh. He's the new president of The Weather Channel, the bland but dependable cable network in Atlanta that delivers all weather, all the time. "The first night I got here, there were tornadoes in the eastern part of Carolina. There was a sense of excitement--look at how these are forming, look at the colors on the radar--but we work hard to remember that these conditions can be harmful."
Then again, The Weather Channel rushed out a press release last month boasting that "Powerful Hurricane Floyd blew out all the ratings at The Weather Channel...." And who wouldn't brag? This is a channel, after all, that can't match the buzz of HBO, the hipness of MTV, or the excitement of ESPN; its big star is an 80-year-old hurricane expert named John Hope. And yet The Weather Channel, a division of a privately held company in Virginia called Landmark Communications, has become one of the most unlikely success stories in media: It's a surprisingly profitable business that, despite its lack of flash, is poised to dominate its category on cable and on the Internet.
This fall, The Weather Channel becomes the premier weather provider for America Online, and it already delivers wireless weather to cell phones and Palm Pilots. While a European version flopped, El Canal de Tiempo tracks tormentas and huracanes in Latin America, and TWC/Brasil does the same in Brazil. "The opportunity for us is to provide weather anytime, anywhere," says Anstrom.
Landmark, which owns newspapers, TV stations, and specialty publications, won't disclose financials, but analysts estimate that The Weather Channel will generate about $185 million in revenue and $70 million in operating profits this year. (Paul Kagan Associates, a research firm, values the network at more than $1 billion.) Its business model is straightforward: Collect fees of about a dime a month for each of its 72 million subscribers from cable operators, charge advertisers as little as $1,000 for a 30-second spot, and keep costs down. While the channel deploys sophisticated technology and more than 100 meteorologists, its programming is driven by a parade of cold fronts, lake-effect snow, and swirling low-pressure systems. "It's content delivered from God," quips an insider.
The channel's creator was a TV meteorologist named John Coleman, who did weather for Good Morning America in the late '70s. He'd grown weary of having to squeeze a continent's worth of forecasts into a couple of light-hearted minutes, and decided that America needed an all-weather channel, an idea most people found laughable. "It was shopped to every-body," recalls John "Dubby" Wynne, the CEO of Landmark. Wynne ran Landmark's TV stations, where he'd found that the best way to get viewers to sit through the local news was to put weather at the end. "That told us that there were an awful lot of people who cared about weather," says Wynne. Even so, the channel lost money for years as distribution grew slowly.
Ratings inched up as people--parents, commuters, weekend athletes, business travelers, farmers--started checking The Weather Channel. Today the channel attracts about 300,000 viewers in a typical minute. Most tune in briefly, but many who call themselves "weather weenies" tune in for hours. These are people who chase tornadoes, own weather stations, and read Weatherwise magazine. "I can watch for seven, eight hours at a stretch," says Dave Thurlow, host of a public radio program, Weather Connection. Essayist Russell Baker once wrote, "Doctor, help me, I'm hooked on The Weather Channel."
While the channel dominates national cable, competitors are arising locally and on the Web. LIN Television, Cablevision, and NBC are all doing local or regional weather channels, while industry pioneer Accu-Weather appears on more than 1,000 Internet sites. But The Weather Channel Website ranks in the top ten of all Internet "content" sites, ahead of those of most broadcast and cable networks. And that's before the AOL deal kicks in. The site offers forecasts for 70,000 locations, weather by e-mail, and enough personalization and archived data to satisfy the weather weenie who simply must record every last weather disaster known to science. Not that The Weather Channel wants bad weather, mind you.