Ottawa Citizen

Time scraps Weather Channel bid

Pullout could lead to Microsoft bid for AOL holdings

- BY KENNETH LI

Media conglomera­te NEW YORK • Time Warner Inc. has withdrawn its bid to buy the Weather Channel after refusing to raise its offer, a source familiar with the negotiatio­ns told Reuters yesterday, leaving as the remaining bidder an investor group that includes NBC Universal.

Time Warner chief financial officer John Martin told investors last week the company would be interested in pursuing a deal but would be “extremely price discipline­d and price sensitive.”

It was not clear how much Time Warner had offered.

Shares of Time Warner rose more than three per cent.

“They’re still interested in acquisitio­ns, but they’re going to be discipline­d in the price they pay,” said Christophe­r Marangi, an associate portfolio manager at Time Warner investor Gabelli & Co.

The deadline for a new offer passed at noon yesterday, leaving a consortium of General Electric’s NBC Universal, Blackstone Group LP and Bain Capital as the only bidder.

The consortium offered an estimated $3.5 billion, sources said earlier, to buy the cable network owned by Landmark Communicat­ions that produces national, regional and local weather-related programmin­g.

Sources previously told Reuters that NBC Universal, Blackstone and Bain would divide $1.8 billion of equity roughly equally in their bid, which would be worth about $3.5 billion, including debt. Blackstone’s GSO Capital — a hedge fund firm specializi­ng in leveraged debt — would provide about $600 million in debt, another source told Reuters.

The Weather Channel network serves about 96 million U.S. subscriber­s and can be seen in more than 97 per cent of all cable television homes.

The latest developmen­t would leave Time Warner free to pursue other cable networks, which media analysts largely anticipate.

Time Warner is due to receive a $9-billion payout when it separates its cable services by the end of the year. Walking away from the Weather Channel negotiatio­ns is seen as allaying investors fears the company would overpay for deals with that much cash in the coffer.

Mr. Marangi, in a research note yesterday, said Microsoft Corp.’s failed attempt to seal a deal to buy Yahoo! Inc.’s search technology could also push the software giant closer to Time Warner’s AOL Internet division.

“A combinatio­n with AOL might be Microsoft’s secondbest option,” he wrote. “No other available Internet asset possesses its breadth or scale. An acquisitio­n of AOL would modestly increase Microsoft’s search share (and) boost its page views.”

He valued AOL’s websites and advertisin­g business at $12 billion, and its dial-up Internet business at $2.8 billion.

On Monday, Time Warner CEO Jeffrey Bewkes suggested at a conference it was in the mix of discussion­s that could redraw the Internet landscape.

“There’s a lot going on in terms of the various owners, whether it’s Microsoft, Yahoo, floating around trying to figure out who should dance with who,” he said at a Deutsche Bank media conference. “And I think that could implicate AOL or parts of AOL.”

 ?? NIC FULTON, REUTERS ?? Lightning strikes the AOL/Time Warner building in New York this week. The media giant has pulled out of the bidding for the U.S. Weather Channel but remains in the hunt for other investment­s, analysts say.
NIC FULTON, REUTERS Lightning strikes the AOL/Time Warner building in New York this week. The media giant has pulled out of the bidding for the U.S. Weather Channel but remains in the hunt for other investment­s, analysts say.

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