The Weather Company, which owns of The Weather Channel along with a bunch of weather websites, apps and other businesses, will sell the entire company, aside from the TV channel, to IBM.
IBM said it would acquire The Weather Company's corporate and digital business, which includes a lucrative set of operations that store and analyze weather data and license it to other companies. The Weather Company's former owners — NBC Universal, and private equity firms Bain Capital and Blackstone — will continue to own the Weather Channel, which will do a licensing deal with IBM for weather data.
"The Weather Channel operates as a distinct and separate business with its own leadership team, which enables this to be a smooth and seamless transition," said Dave Shull, the CEO of the channel, in a statement.
While the two companies didn't disclose a sale price, the Wall Street Journal reported that a deal would be for around $2 billion. IBM said the Weather Company sells its data and services to more than 5,000 corporate and government clients.
IBM, best known for selling computing hardware and consulting to companies, has made big investments into supercomputing and the large scale data collection and analysis that goes with it. The public face of such efforts are supercomputers like the company's Jeopardy-winning machine, Watson.
The company said acquiring a giant archive of weather data, as well as the systems and talent to understand it, is another step in its supercomputing efforts. As an example, IBM said the acquisition could help it do "predictive weather analytics coupled with real-time analysis of social media chatter," helping "retailers and distributors finely tune and maintain availability of vital goods in times of need."
John Kelly, an IBM executive, unleashed a volley of tech industry buzzwords when explaining the deal to Bloomberg TV. "What’s really exciting about this is the Weather Company has a very high volume platform underlying their capability that people are accessing through mobile devices," he said. "It’s cloud based so we’re getting a very high volume platform for the internet of things, specifically around weather, but we’ll extend that.”
Weather data can be useful across a range of industries, from transport to energy, insurance and farming. "The Weather Company’s cloud-based data platform will allow IBM to collect an even larger variety and higher velocity of global data sets, store them, analyze them and in turn distribute them and empower richer and deeper insights across the Watson platform," IBM said in a statement announcing the deal.
The acquisition will also give IBM a foothold in people's smartphones, where it will take over the Weather Channel app, which it says is the fourth most used app in the United States on a daily basis — as well as a valuable source of data in its own right. The Weather Company's "sophisticated models analyze data from three billion weather forecast reference points, more than 40 million smartphones and 50,000 airplane flights per day, allowing it to offer a broad range of data-driven products and services," IBM said.
While much of the raw data used for forecasting and analysis is generated by government, weather can still be big business for companies that serve the industries that most care about it. The Climate Corporation, a startup founded by former Google employees that sells data analysis to farmers, was bought by Monsanto for over $1 billion in 2013.
IBM is currently valued at about $128 billion, and its shares were up 2% in the hours following the deal's announcement.
CORRECTION
Climate Corporation sells its services to farmers, not agricultural corporations.