Time scraps Weather Channel bid
Pullout could lead to Microsoft bid for AOL holdings
Media conglomerate NEW YORK • Time Warner Inc. has withdrawn its bid to buy the Weather Channel after refusing to raise its offer, a source familiar with the negotiations told Reuters yesterday, leaving as the remaining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.”