July 7, 2008 / 3:11 AM / 10 years ago

UPDATE 4-NBC Universal, partners to buy Weather Channel

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By Jessica Hall

PHILADELPHIA, July 6 (Reuters) - NBC Universal and private equity firms Bain Capital and Blackstone Group (BX.N) said on Sunday they agreed to buy The Weather Channel from Landmark Communications.

Terms of the widely expected deal were not disclosed, but sources familiar with the transaction said the price tag was just under $3.5 billion.

Privately held Landmark, which put The Weather Channel up for sale along with other businesses, originally had sought $5 billion for the unit, which produces national, regional and local weather-related programming, sources previously said.

The transaction includes the Weather Channel Networks cable network and the Weather Channel’s website. The Weather Channel will continue to operate as an independent business managed by NBC Universal.

The $3.5 billion price tag on Weather Channel marked one of the biggest private equity deals in the past year. In May, Carlyle Group [CYL.UL] agreed to buy a majority stake in a unit of consulting firm Booz Allen Hamilton for $2.5 billion, and Blackstone Group last month said it would buy Apria Healthcare Group Inc AHG.N for $1.6 billion.

NBC Universal, which is part of General Electric Co (GE.N), would add The Weather Channel to its other news and information assets, which include NBC News, MSNBC, CNBC, and their affiliated websites.

“This is premier media asset with a unique position across all three screens — television, PC, and mobile — and exciting growth prospects in each of them,” said Michael Chae, Blackstone Group’s senior managing director.

The Weather Channel is the third most distributed cable network and is viewable in more than 97 percent of cable television homes in the United States. Its website, www.weather.com, has nearly 40 million unique visitors per month.

NBC Universal has existing ties with Blackstone through their joint venture for the Universal Orlando Resort theme park in Florida. Bain, meanwhile, would add The Weather Channel to its other media investments, which include radio station operator Clear Channel Communications Inc.

Landmark launched The Weather Channel more than 25 years ago and built it into a television, Internet and mobile information business serving 120 million people monthly, Landmark Chairman and Chief Executive Frank Batten Jr said.

The business and its employees would have increased opportunities for growth under the ownership of the NBC Universal group, Batten said.

The Weather Channel deal is expected to close by the end of the year, subject to regulatory approvals.

NBC Universal and the two private equity firms announced last month that they had entered into exclusive negotiations to purchase The Weather Channel properties. Time Warner Inc TWX.N withdrew its bid in June, sources previously told Reuters.

Landmark said in January it might sell various businesses, including a range of U.S. daily newspapers and television and Internet assets. Landmark also has been trying to sell Dominion Enterprises, a portfolio of advertising websites and publications, media reports have said.

Deutsche Bank Securities Inc. acted as the lead financial adviser for the consortium, with Allen & Co. and Credit Suisse also providing financial advice.

Deutsche Bank Securities Inc., GE Commercial Finance, Blackstone’s GSO Capital, and Bain’s Sankaty Advisors LLC will provide the debt financing for the transaction.

NBC Universal and the buyout firms would divide $1.8 billion of equity roughly equally in their bid, sources previously told Reuters. Blackstone’s GSO Capital — a hedge fund firm specializing in leveraged debt — would provide about $600 million in debt, the sources previously said. (Additional reporting by Jui Chakravorty and Phil Wahba in New York; Editing by Leslie Adler and Lincoln Feast)

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