IBM Nears Deal for Some Weather Co.'s Assets
International Business Machines is nearing a deal to acquire the digital and data assets of Weather Co., owner of the Weather Channel, according to people familiar with the situation.
The deal, which would be valued at more than $2 billion, could be announced as early as Wednesday, one of the people said.
The deal doesn't include the traditional TV channel business but does include such digital businesses as the website and app, intellectual property, infrastructure and data, the people said.
IBM is particularly interested in Weather Co.'s forecasting group, WSI. That division houses technology and weather data that the Weather Co. collects, manipulates and licenses to companies ranging from airlines to utility companies to insurance providers.
Weather Co. is owned by a consortium that includes private-equity firms Bain Capital and Blackstone Group, and Comcast's NBCUniversal. They bought the company in 2008 for roughly $3.5 billion.
Weather Co. Chief Executive David Kenny is expected to join IBM after the deal closes, according to one of the people.
Weather Co. had courted various types of potential buyers. More than a year ago, Google was offered the chance to bid on the Weather Channel's digital assets but the company wasn't interested, according to a person familiar with the matter.
Recode earlier reported that IBM was in advanced talks to acquire Weather Co.'s digital assets.
Weather Co. is best known for the Weather Channel and its friendly meteorologists like Jim Cantore, who people routinely turn to for information during hurricanes and blizzards. But prospects for the TV channel have dimmed in a tough media environment where consumers are cutting the pay-TV cord and slimming down cable packages. That has raised fears that smaller networks like Weather Channel will struggle to grow subscription fees.
People close to Weather Co. say that the company envisions a future for the TV channel tied to "over-the-top" streaming products. Earlier this year, the company struck a deal to be carried on Dish Network's Sling TV streaming video service. A sale of Weather Channel is also on the table, one of the people said.
Weather Co. and IBM already have an alliance, struck earlier this year. The idea was to combine Weather Co.'s weather data and forecast information with IBM's cloud computing skills and analytics know-how, so the two could come up with new ways to package and sell weather data and business solutions to different industries. IBM's artificial intelligence service, Watson, is central to that arrangement.
IBM believes that it can enhance the Weather Channel's forecasts to build new products. Retailers, for example, could better manage their supply chain by knowing when sales might slump because of snowstorms. Another example the companies have touted is the ability to sell insurance providers a way to alert policyholders via their smartphone that there was a hailstorm coming and notify them to move cars to a safer location. That type of service could help save insurers millions of dollars in claims.
When it comes to artificial intelligence, data is the raw material that IBM needs to do meaningful work. Watson must analyze a substantial amount of data to refine its algorithms, said John Kelly, senior vice president of IBM's solutions portfolio and research, in a July interview.
Over the past year, IBM has worked hard to secure new data sources for its software, forging new relationships with Twitter, Apple, Johnson & Johnson, Medtronic, and the Weather Channel's WSI division, which generates more than 10 billion weather forecasts a day.
In August, IBM said it would spend $700 million to buy Merge Health care, a medical imaging technology company that came with a trove of 30 billion X-rays, computerized tomography, and magnetic-resonance-imaging scans that the company will use to improve Watson's analytical capabilities.
Shalini Ramachandran and Alistair Barr contributed to this article.
Write to Suzanne Vranica at suzanne.vranica@wsj.com and Robert McMillan at Robert.Mcmillan@wsj.com