Finance: the Weather Channel, How does it make money?

With the recent purchase of the Weather channel at $3.5 Billion dollars, I had to ask a question. How does it make money?!



A lot of jokes and bits were made on this issue on Late Night TV, but I just got to wondering. Where would a company like the Weather Channel get all of its streams of revenue from?



Any guesses? Let me guess, they own all weathermen and gets a cut of all weather broadcasts : ) . I don't know; I just can't see a bunch of corporations buying marketing spots for a lot of money for this to seem feasible in recouping the purchase.



Throw me some theories or answers.Finance: the Weather Channel, How does it make money?
To the people who scream and holler about their cable bill increases, this is why the cable bill increases:



Many consumers ask for a weather channel, so cable/satellite companies make sure they provide it in their channel lineup. The corp that owns this particular channel signs a contract for a specified dollar amount to provide the channel to each individual cable company and satellite company. Say it's Time Warner, they would pay say 10 million a year for the duration of the contract. If it's a yearly contract, then that corp that owns the weather channel can up the amount to 11 million once that contract expires. (This is also how satellite can own the NFL Tickets outright, and how sometimes channels can be black for a couple of days during negotiations -- the corps are holding out for more $$) The cable company certainly can't remove the weather channel from the lineup because people would FREAK OUT, so they have to pass that increase on to their subscribers. Now there are 50-55 cable companies plus the satellite companies, the money starts to pile up. Add to that the commercials and advertisements, it's a company that can be sold for 3.5 Billion dollars.Finance: the Weather Channel, How does it make money?
I'm sorry, but their main source of revenue is advertising. This is true for any type of broadcast entity that isn't a non-profit.