Following rumors that it was exploring the sale of its weather business as part of a move to streamline operations, IBM says that it's found a buyer for The Weather Company, the weather forecasting and information company it acquired in 2015.
Francisco Partners, the private equity firm, has signed a definitive agreement to acquire The Weather Company assets from IBM, the two companies announced today. The terms of the deal weren't disclosed, save that it's expected to close by the end of Q1 2024 -- subject to regulatory approvals and customary closing conditions, of course.
As a part of the acquisition, Francisco Partners will get The Weather Company's consumer-facing apps, including The Weather Channel mobile, Weather.com, Weather Underground and Storm Radar, plus The Weather Company's enterprise offerings for broadcast, media, aviation, adtech and "data solutions." In addition, The Weather Company will bring its forecasting science services to Francisco Partners, IBM says, as well as its tech platform.
As for IBM, it'll retain The Weather Channel's sustainability software business post-purchase -- namely its "environmental intelligence suite" for ESG reporting. And it'll continue to use The Weather Company's weather data for "climate-related use cases" like the geospatial AI model it offers in Watsonx, its AI and data platform
"We're proud of what The Weather Company team has accomplished with IBM, and we're confident that the best path forward is as a standalone company benefiting from Francisco Partners' expanded investment, dedication and expertise," Rob Thomas, SVP of software and chief commercial officer at IBM, said in a press release. "Over the last few years, we've evolved IBM to be a hybrid cloud and AI company. We regularly review our portfolio to make sure our business areas are core to that strategy, and today's news reflects our continued focus on these two transformational technologies."
When IBM purchased The Weather Company for $2 billion, it pitched the move as a major long-term analytics, big data and internet of things play. To wit, over roughly eight years, IBM has launched a number of new apps and services on top of The Weather Company's properties, including hyperlocal forecasts, COVID-19 maps and enhanced weather forecasts leveraging data from aircraft and smartphones.
Under IBM's management, The Weather Company, founded in 1980 as The Weather Channel, grew to serve an average of more than 415 million people each month on its consumer-facing properties and over 2,000 businesses through its enterprise products.
But IBM, which in June spent $4.6 billion to acquire Apptio, the business spend and value management platform, is under pressure to turn its financials around.
In its most recent fiscal quarter, IBM generated revenue of around $15.5 billion, down 0.4% from its year-ago result. The company's mainframe business alone fell 30%, while its infrastructure business declined to $3.6 billion, down 14.6%.
Facing its lowest share price in over 20 years, IBM is laying off staff, in March announcing plans to cut its headcount by 3,900 people -- concentrated mostly in its Watson AI division and Kyndryl managed infrastructure business. IBM also recently sold Watson Health to Francisco Partners, a deal reportedly in the $1 billion range. (Some reports suggest IBM was seeking a similar price tag for The Weather Company.)
Francisco Partners sees a bright future in The Weather Company, saying it plans to increase investment and resources in the platform to take it "beyond forecasting alone" with "new tools and experiences" focused on health and well-being. On the business side, The Weather Company will offer "more actionable insights," Francisco Partners says, alongside "real-time experiences" aimed at ad and subscription media companies.
"Amid the growing volatility of weather, The Weather Company's unique set of consumer, media and industry-specific products provide mission critical, data-driven weather insights to individuals and businesses around the world," Alan Ni, partner at Francisco Partners, said in a canned statement. "We're excited to partner with the management team to grow The Weather Company's robust portfolio of technology offerings and deliver a great product experience for its customers."
There's no denying that weather forecasting is a lucrative business. A National Weather Service survey from 2012 pegs the total value of weather data that could be captured across all industries in the U.S. in the range of $13 billion. The private weather forecasting market, meanwhile, is expected to grow from $1.76 billion in value in 2022 to $4.18 billion in 2030, according to a report from Verified Market Research.