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Computing giant IBM says it will buy the digital assets of The Weather Company, parent of TV’s Weather Channel.
The deal doesn’t include the TV operations, but is focused on the Weather Company’s range of digital weather information assets including smartphone apps and websites as well as data sets. Terms of the deal call for the TV channel to license its weather data from IBM under a long-term contract. Financial details were not disclosed, but sources familiar with the deal say the price was slightly above $2 billion.
In a statement, Dave Shull, CEO of the Weather Channel Television Network, said the network will “continue to be owned and supported by our existing shareholders — Bain Capital, Blackstone and NBCUniversal — and operate as a standalone business.”
The deal confirms a Re/code story from 10 days ago.
The Weather Company is currently owned by two private equity firms — Blackstone Group and Bain Capital — and by NBCUniversal. The three had been contemplating a variety of strategic options for more than a year and approached several potential buyers. The trio paid $3.5 billion for the company in 2008.
The deal brings together’s IBM’s existing Watson cognitive computing system as well as its capabilities in analytics — examining large troves of data for patterns that can be used to predict outcomes. The Weather Company already has its own cloud computing system, which powers the fourth most-used mobile app daily in the U.S. and which, the company says, handles 26 billion inquiries every day.
The companies have a history of operating together. IBM and The Weather Company teamed up in March in a corporate alliance. As part of that deal, The Weather Company moved its data to IBM’s cloud services.
IBM sees a strong business opportunity in coupling weather data with other information that can have an impact on the operations of businesses. While it’s not exactly a logical leap to conclude that retail sales fall when temperatures fall in the Northeast, if you’re a large retailer, it’s helpful to know that a 10-degree drop tends to predict an average decline in sales of more than 15 percent so you can plan accordingly.
Transportation and logistics companies are also affected heavily by weather and are willing to pay for information that’s a lot more detailed and specific than an average TV forecast. If trucks carrying goods can’t get across a state or if ships can’t get into port, that’s lost money. Utilities can plan to supply their power grids more precisely knowing what the temperature is likely to be hours and days in advance.
IBM’s business will be enhanced by the lesser-known but formidable network that the Weather Company has built under Chairman and CEO David Kenny. The company’s systems crunch data gathered from more than three billion weather forecast reference points, including 40 million smartphones and 50,000 aircraft flights every day. Forecasts are updated for thousands of points on the globe every 15 minutes — not just for mainstream consumers, but for some 5,000 companies in industries ranging from media to insurance to aviation, plus government agencies.
“We wanted to take the weather excuses out of business,” said Bob Picciano, senior VP for analytics at IBM, of the alliance the companies struck earlier this year.
Kenny, who will join IBM after the deal closes, says he sees opportunities for IBM to branch out from analyzing weather into adjacent types of data that also have a bearing on business. “We see places for our capabilities in health or finance or smart cities. We have big ambitions for this and under private equity there wasn’t necessarily much support for the sort of investment needed,” Kenny said. “Our vision overlaps with IBM’s, so there will always be a weather business, but I signed up to move this into adjacent categories.”
This article originally appeared on Recode.net.
