Outlook Is Sunny For Weather Services

Outside of a few major markets where cable operators have launched local 24-hour news channels, broadcast stations have long had a lock on one of the most popular and valuable types of content—live local weather forecasts.

That appears to be changing, however, as cable operators begin to use low-cost centralized weather services and technologies to develop their own local weather channels. The move opens up new opportunities for multichannel providers to tap into local ad revenue and create increased competition for broadcasters.

The strategy has worked so far for the Kentucky cable systems of the country’s 13th-largest multichannel operator, Insight Communications. Earlier this year, Insight revamped its local origination channels (which had been racking up losses approaching $1 million per year) and devoted one of the freed-up slots to the launch of new channel, CN2.

The channel offers a nightly Kentucky politics show and will soon launch a daily sports program, but much of its schedule consists of local weather feeds produced more than 800 miles away by BroadcastWeather, a centralized weather facility in the suburbs of Minneapolis that is a division of WeatherGlobal LLC.

Outsourcing weather reports to a centralized facility has allowed CN2 to offer five different local weather forecasts and feeds to its Kentucky systems without the $1 million-$2 million upfront costs it might have faced for setting up a local operation.

Another plus, Insight executives note, is that the model offers greatly reduced operating expenses. Generally, BroadcastWeather clients are able to offer local weather for about one-third the cost of producing forecasts themselves, notes Paul Douglas, CEO and founder of BroadcastWeather.

“The local origination channels were losing a substantial amount of money for the company, and we didn’t see a tremendous amount of community value in them,” says Mark Spilman, VP/operations at Insight Media, who views CN2 weather programming as a model for other MSOs looking to improve both local programming and their bottom line.

Before launching CN2, Insight commissioned Frank N. Magid & Associates to conduct customer surveys that found “the top thing they wanted was more weather,” Spilman says. “By partnering with BroadcastWeather, we were able to offer local and hyper-local content that really fulfills a need, and we really believe it is going to reap some financial benefits for the company.”

Kevin Dowell, Insight Media senior VP, notes that the move has strengthened the company’s position in the local ad market versus broadcasters. “It is really the first chance we’ve had to sell truly localized programming and content,” says Dowell. Insight has seen strong demand for CN2 ads and has secured a number of commitments for 2011, Dowell adds.

Other MSOs are eyeing similar strategies, says Todd Frostad, president and COO of BroadcastWeather. “We’re in conversations with several MSOs that have facilities of their own in larger markets, but are looking at their smaller markets, where it is difficult to justify the costs of doing [weather] on their own,” Frostad says.

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