IBM to Buy Weather Co.'s Digital, Data Assets
October 28 2015 - 10:30AM
Dow Jones News
International Business Machines Corp. agreed to acquire the
digital and data assets of Weather Co., owner of the Weather
Channel.
Financial terms weren't immediately disclosed. The Wall Street
Journal reported Tuesday that the deal could be valued at more than
$2 billion, citing a person familiar with the matter.
The deal doesn't include the traditional TV channel business but
does include such digital businesses as the website and app,
intellectual property, infrastructure and data, people familiar
with the matter said.
IBM is particularly interested in Weather Co.'s forecasting
group, WSI. That division houses technology and weather data that
the Weather Co. collects, manipulates and licenses to companies
ranging from airlines to utility companies to insurance
providers.
Weather Co. is owned by a consortium that includes
private-equity firms Bain Capital LLC and Blackstone Group LP, and
Comcast Corp.'s NBCUniversal. They bought the company in 2008 for
roughly $3.5 billion.
Weather Co. Chief Executive David Kenny is expected to join IBM
after the deal closes, according to one of the people.
Weather Co. had courted various types of potential buyers. More
than a year ago, Google Inc. was offered the chance to bid on the
Weather Channel's digital assets but the company wasn't interested,
according to a person familiar with the matter.
Recode earlier reported that IBM was in advanced talks to
acquire Weather Co.'s digital assets.
Weather Co. is best known for the Weather Channel and its
friendly meteorologists like Jim Cantore, who people routinely turn
to for information during hurricanes and blizzards. But prospects
for the TV channel have dimmed in a tough media environment where
consumers are cutting the pay-TV cord and slimming down cable
packages. That has raised fears that smaller networks like Weather
Channel will struggle to grow subscription fees.
People close to Weather Co. say that the company envisions a
future for the TV channel tied to "over-the-top" streaming
products. Earlier this year, the company struck a deal to be
carried on Dish Network Corp.'s Sling TV streaming video service. A
sale of Weather Channel is also on the table, one of the people
said.
Weather Co. and IBM already have an alliance, struck earlier
this year. The idea was to combine Weather Co.'s weather data and
forecast information with IBM's cloud computing skills and
analytics know-how, so the two could come up with new ways to
package and sell weather data and business solutions to different
industries. IBM's artificial intelligence service, Watson, is
central to that arrangement.
IBM believes that it can enhance the Weather Channel's forecasts
to build new products. Retailers, for example, could better manage
their supply chain by knowing when sales might slump because of
snowstorms. Another example the companies have touted is the
ability to sell insurance providers a way to alert policyholders
via their smartphone that there was a hailstorm coming and notify
them to move cars to a safer location. That type of service could
help save insurers millions of dollars in claims.
When it comes to artificial intelligence, data is the raw
material that IBM needs to do meaningful work. Watson must analyze
a substantial amount of data to refine its algorithms, said John
Kelly, senior vice president of IBM's solutions portfolio and
research, in a July interview.
Over the past year, IBM has worked hard to secure new data
sources for its software, forging new relationships with Twitter
Inc., Apple Inc., Johnson & Johnson, Medtronic Inc., and the
Weather Channel's WSI division, which generates more than 10
billion weather forecasts a day.
In August, IBM said it would spend $700 million to buy Merge
Health care, a medical imaging technology company that came with a
trove of 30 billion X-rays, computerized tomography, and
magnetic-resonance-imaging scans that the company will use to
improve Watson's analytical capabilities.
Write to Suzanne Vranica at suzanne.vranica@wsj.com and Robert
McMillan at Robert.Mcmillan@wsj.com
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(END) Dow Jones Newswires
October 28, 2015 10:15 ET (14:15 GMT)
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