IBM is reportedly nearing a deal for the acquisition of the digital and data assets of Weather Channel owner Weather Co., according to sources who are familiar with the matter.
The deal, which could be valued as high as over $2 billion, could be announced by IBM as early as Oct. 28. David Kenny, the CEO of Weather Co., will be joining IBM if the deal pushes through.
IBM's planned acquisition, which does not include Weather Co.'s traditional TV channel business, will cover the digital businesses of Weather Co., including its app, website, intellectual property, data and infrastructure, according to the sources. This also includes Weather Underground and Weather Services International (WSI).
Weather Co. is known best for its Weather Channel, which features meteorologists such as Jim Cantore. Customers routinely depend on the Weather Channel for information in situations of blizzards and hurricanes. However, the future of the TV channel has started to darken amid the tough environment of the media industry, where customers are opting for smaller packages for cable TV subscriptions. This trend has been raising fears that smaller channels such as the Weather Channel would be struggling to increase subscription fee income.
Of particular interest to IBM is the forecasting group of Weather Co. – WSI. The unit includes the technology and the weather data that Weather Co. gathers, manipulates and then licenses to other companies, including utility companies, airlines and insurance providers.
Weather Co. is co-owned by a consortium that purchased the company back in 2008 for about $3.5 billion. The group includes Bain Capital and Blackstone Group, which are private equity companies, and NBC Universal of Comcast.
According to sources, Google was given the chance to acquire the digital assets of the Weather Channel, but Google registered no interest in the purchase.
IBM already has struck a partnership with Weather Co. earlier in 2015, which looked to blend the forecast data and weather information of Weather Co. with the analytics knowledge and cloud computing skills of IBM. The partnership would be developing ways to package and then sell weather products and services to various industries, with Watson, the artificial intelligence system of IBM, playing a huge role in the collaboration.