What is The Weather Channel worth?

On a hot July day in 1981, Frank Batten Sr. stepped before an expectant crowd of reporters in a Manhattan hotel ballroom and announced a new media venture for Norfolk-based Landmark Communications Inc.

"We'll be offering the nation's first all-weather television programming," he said. "It will be all weather, 24 hours a day. We call it... The Weather Channel."

At first, there was silence. Then a collective groan went up from the audience, Batten recalled in his 2002 book, "The Weather Channel: The Improbable Rise of a Media Phenomenon."

Nothing but weather, 24 hours a day? Wouldn't that be incredibly dull? Who would want to watch that?

Turns out, lots of people.

Nobody's groaning anymore. Despite near-death experiences in its early years, today The Weather Channel is Landmark's cash cow. It is also the locomotive driving the train toward the potential breakup of a 143-year-old media company.

When the news broke late Wednesday that Landmark hired two investment banking firms to explore selling the company, it was quickly apparent that of all its holdings - including The Virginian-Pilot - The Weather Channel is clearly the company's most lucrative and sal able property.

"It's a unique brand," said Peter Kreisky, a New York-based media consultant. "It's one of the crown jewels of cable television because it's a must-have channel for almost every cable system in the country."

One investment firm,

JPMorgan, is advising Landmark solely on the sale of its basket of weather-related properties.

The other, Lehman Brothers, is handling the company's other assets, which might be sold off piecemeal. They include metro daily newspapers in Hampton Roads, Roanoke, Greensboro, N.C., and Annapolis, Md.; a group of more than 70 community newspapers, shoppers and college sports publications; and two network TV stations in Nashville, Tenn., and Las Vegas.

This group also includes Dominion Enterprises, a Norfolk-based subsidiary that provides consumer classified-style information on real estate, jobs, specialty vehicles and other topics in publications and on Web sites. Dominion, created in 2006 from the breakup of assets in a joint venture with Cox Enterprises, generates nearly half of Landmark's $2 billion-plus of annual revenue.

Yet The Weather Channel is far and away Landmark's most recognizable brand.

It is tied for sixth place among the nation's top cable channels, reaching 97.3 million households, according to the National Cable & Telecommunications Association.

Could The Weather Channel and its related properties really bring $5 billion - about the amount that Rupert Murdoch's News Corp. paid for Dow Jones, publisher of The Wall Street Journal? That's the figure that bubbled up in several media reports Thursday.

It's entirely possible, said Derek Baine, a senior analyst at SNL Kagan, a Monterey, Calif.-based media consulting company.

SNL Kagan estimates The Weather Channel's 2007 total net revenue at $290.6 million and its cash flow at $109.8 million - a margin of 37.8 percent.

If the cable channel were the extent of the business, it would be worth about $1.5 billion, or 14 times cash flow, Baine said.

"But it's got a lot of other assets," he said. "The biggest one is the online business."

The Weather Channel's Web site, weather.com, was No. 8 among Advertising Age's top Web brands in March 2007, reaching 37.8 million unique visitors - just behind YouTube and ahead of CNN.

"I've heard that's doing about $125 million a year in revenue and is very profitable," Baine said. "Internet businesses are difficult to value, but it's not hard to believe that somebody like a News Corp. would value that at maybe $3 billion or more."

The Weather Channel also operates WSI Corp., a major supplier of weather forecasting services to TV stations and cable networks. Baine pegged its annual revenue at $35 million.

In short, "The Weather Channel is vertically integrated," Baine said. "They're constantly getting people knocking on their door asking them to sell."

The New York Times reported Thursday that News Corp., NBC and Comcast are among the suitors.

Landmark also should have no trouble finding buyers for its portfolio of newspapers, but industry analysts and newspaper brokers expressed surprise at the timing of the sale.

"There will be considerable interest, but it certainly isn't a good time to be selling newspapers," said John Morton, president of Morton Research Inc. and a veteran newspaper-industry analyst.

Because Landmark has been privately owned and doesn't share its financial results, some analysts said they weren't familiar with the values of the newspapers and Dominion Enterprises.

The responses from prospective newspaper buyers will likely be more subdued than they would have been in the past, Morton said, because the industry's profit margins, especially for metropolitan dailies, have been shrinking steadily.

"Ten years ago, a lineup" of newspapers like those at Landmark, "would have produced a stampede of buyers," said Thomas Bolitho, an Ada, Okla., broker, appraiser and consultant who specializes in community newspapers.

A handful of large media companies are still digesting major transactions involving newspapers. The McClatchy Co. chain, based in Sacramento, Calif., bought the Knight Ridder group of papers two years ago and has sold some of those it acquired. In Chicago, the Tribune Co., parent of the Chicago Tribune, Los Angeles Times and several other dailies, was taken private in December. News Corp. recently completed its acquisition of Dow Jones, parent of The Wall Street Journal.

However, buyer interest in Landmark's TV stations could be strong, analysts said. This is an opportune time to sell stations because of the additional revenue that they will generate this year from political advertising, Morton said.

One company thought to be looking at Landmark properties is Media General Inc., the Richmond-based publisher and broadcaster.

The company's share price fell 12 percent, or $2.40, in heavy trading Thursday to close at $17.15.

"Our long-standing policy is not to comment on rumor, speculation or potential acquisitions," said Ray Kozakewicz, a Media General spokesman.

Several newspapers have been acquired in recent years by private-equity funds that raised capital from pension funds, wealthy individuals and other sources. However, it's more likely that Landmark's papers will be bought by other newspaper companies, Morton and others predicted.

One factor that could curb the interest of prospective buyers is the availability of financing, said Bolitho, whose firm concentrates on community newspapers in the Midwest and South. "Credit is tight, which has made it tougher to put a deal together," he said.

Bolitho and others said it's possible that Landmark's group of community newspapers will be sold separately from the company's larger dailies in Hampton Roads, Roanoke, Greensboro and Annapolis. That's because companies publishing community newspapers tend to be distinct from those with metro dailies.

Some of Landmark's papers, including The Virginian-Pilot, have devoted greater resources in recent years to the delivery of news online. That's a valuable asset, said Morton, but "it's still a small part of what newspapers do in terms of their revenue."

Bill Sizemore, (757) 446-2276, bill.sizemore@pilotonline.com

Tom Shean, (757) 446-2379, tom.shean@pilotonline.com