NBC ties up with private equity partners to buy The Weather Channel for $3.5 billion

In a continuation of the consolidation in the media industry that has seen major media conglomerates diversifying their portfolios in recent times, General Electric-owned NBC Universal has tied up with Bain Capital and Blackstone to successfully negotiate the largest American leveraged buyout this year by buying The Weather Channel from Landmark Communications Inc. for an estimated $3.5 billion.

Similar deals in the recent past include NBC's acquisition of cable channel Bravo for $1.25 billion in 2002, News Corp spending $580 million to buy social networking site MySpace in 2005, and CBS buying tech news site CNET for $1.8 billion last May.

The winning consortium beat Time Warner in a closely contested auction after privately held Landmark Communications put Weather Channel and a variety of other media properties on the block.

The Weather Channel (TWC) will be run as a separate entity, based in Atlanta, with management services provided by NBC Universal. Available in some 96 million American homes, the Weather Channel is the country's third most widely distributed cable channel. It also runs the 14th most popular site on the Internet, weather.com.

The channel also has a brand-new $60 million state-of-the-art, high-definition recording studio in Atlanta, from which it can produce digital broadcasts both for television and the Web. Viewers can also look forward to long-form programming, like weather documentaries and dramas, that meld Weather Channel content with NBC talent.

The Blackstone Group, Bain Capital, and NBC will reportedly pay just $600 million each upfront, and finance the balance. The Weather Channel's estimated $175 million annual earnings should help defray the debt.