David Kenny, the CEO of Atlanta-based Weather Co. (parent company of the Weather Channel), comes across as mild mannered and pleasant in person.
But he has opted to hit DirecTV hard in a campaign the past two-plus weeks to pressure the satellite carrier to bring back the Weather Channel. The company blacked out the Atlanta-based network Jan. 13 because the two sides couldn’t agree on how much DirecTV would pay to carry the network.
The Weather Company – owned by a consortium of private-equity firms Blackstone and Bain Captial as well as Comcast’s media company NBCUniversal – hired Kenny two years ago to try to fix up a cable network that was struggling to find new viewers as more people were getting their weather elsewhere.
Recently, the network revamped and recommitted to hardcore weather coverage via a new branding campaign. It also hired a big-name celebrity in Sam Champion (“Good Morning America”) to be its managing editor and new morning host starting in March.
I wrote a more analytical story about the future of the Weather Channel for the business section available in the Sunday print edition and myajc.com here.
Here are excerpts from an in-person Q&A Monday and follow-up phone call Tuesday just as Winter Storm Leon bore down on Atlanta.
Q: How did this conflict with DirecTV even happen? Did you see this coming?
Kenny: We have deals with everyone. They tend to be long-term deals. Their deal was up. We spent most of the last year on it. But there was never a negotiation. It was take it or leave it.
Q: They said there hasn’t been much impact. [The letter DirecTV Michael White released said 99.9995% of its subscribers have stayed.]
Kenny: I can’t explain any of it. Their statements don’t make sense. 99.9995 percent mathematically equals 100 people. It isn’t the truth. Even if it were, they should do the right thing and let people leave without egregious cancellation fees. When you pay $1,200 a year and if something of value is taken away and can’t get your money refunded and get out of your contract, it’s crazy arrogant.
Q: How about the public safety angle. DirecTV is often one of the only options in many rural areas.
Kenny: We have millions of fans. Many are in rural areas. They tend not to have a lot of local stations or as many Internet options. There are places that really rely on us. It’s irresponsible on their part.
Q: At what point did you realize you had to go public?
Kenny: When we realized it was not a negotiation. We didn’t want their subscribers to suddenly see us disappear. [So they started informing DirecTV viewers several days before the blackout on Jan. 13.] We wanted to give them a little warning.
Q: How do you justify what you’re charging? [They don’t release numbers but SNL Kagan estimates they charge 13 cents per subscriber per month, a number the Weather Channel has not disputed.]
Kenny: We’re a good value. It’s a network a quarter of people watch every day. We have value to operators and subscribers. We don’t charge very much. We care about servicing everyone.”
Q: Your company has a huge operation.
Kenny: It’s true. It reflects a huge amount of investment in infrastructure to provide increasingly precise forecasts, investments with the FCC to serve the deaf with good captions, investment in new science. We provide more live hours than any other 24/7 news network. People bring us all sorts of stories in how we help them prepare to avoid danger. We have a strong partnership with the National Weather Service.
Q: You recently rebranded the network as well.
Kenny. We invested a lot in our November relaunch. Our ratings have grown ever since. Engagement has grown. We certainly have seen with the recent storms that people continue to come to us. It’s too bad for DirecTV subscribers.
Q: How has the push on Congress been going?
Kenny: More than 300,000 people have contacted Congress. Congressmen care about their constituents. And congressmen care about bullies beating up on an independent network. I think congressmen understand the concept of local. Over the long term, this certainly influences the way the industry is structured, DirecTV has a very strong lobbying effort. This will influence the way they think of them.
Q: Are you confident you’ll be able to get back on DireCTV at some point?
Kenny: I’m prepared either way. We have a strong business. We have great fans. I think our other operators understand our value. I think this will hurt DirecTV reputationally at first, then economically. The question is when will they come back.
Q: You guys have seen some ratings declines in recent years. Are you concerned?
Kenny: Our television business continues to do well. Even without those 20 million subscribers, we were ahead of our ratings last week year over year. With them, we would have been even better. We continue to do a great job.
Q: Do you have a most-favored-nation clause in your contracts (which means if they negotiate a lower fee with on carrier, they have to match that with everyone else.)?
Kenny: We don’t disclose contract details. But it is true that you can’t be cutting unfair deals that are overly favorable to one over another.
Q: If you lose 20 percent of your subscriber base long term, how will that impact you?
Kenny: There are many networks that exist with 80 million households. We certainly can. The whole company is quite diverse. [Moody’s estimates that 40 to 50 percent of the Weather Co.’s revenues are not from the cable network.] We have one of the top mobile apps. We weather.com, Weather Underground. We have a strong, diversified growing business.
Q: What’s your take about criticism that 40 percent of your schedule is reality programming?
Kenny: DirecTV never brought that up while we were talking. They just want to pay less. It’s important when you look at the Weather Channel, you adjust for peaks for storms because that’s what really matters. We had 50 million people watch us during Sandy. Thank God there were no major hurricanes in 2013. But that doesn’t minimize our value. They still want to know we’re there. It’s like insurance. You can’t buy it the day you need it. For America, it’s important that the Weather Channel is there.
Q: You seem to have tightened up the type of reality programming you air.
Kenny: We are carefully developing shows under our brand filter “It’s amazing out there.” We have a new show [for the second quarter] called “Building Invincible,” which is about how buildings withstand hurricanes, floods and fires. We have another one for this fall called “Hurricane 360″ about the anatomy of hurricans. People are curious about hurricanes.
Q: How do you respond to critics you say you overhype the weather?
Kenny: You always want to be honest. I do not believe we overhype the weather. I don’t believe there is evidence of that… We take our safety mission seriously. We have an exemplary track record of being clear… We are the most trusted brand on television. That is clear from a lot of studies. We don’t play with that trust.
Q: Why did you decide to start naming winter storms?
Kenny: That came from our weather communications group… They worked on that. They built criteria. They tested it two years quietly without going on air…. We saw increases in social media where people like to use the same name for a storm. Winter storms have been named in Europe for years.
Q: Wouldn’t you rather a federal agency name storms like hurricanes?
Kenny: At some point, if an official body takes it over, we’ll be fine. Part of being market leaders is sometimes you have to be a leader and go first. We’ve stayed true to our brand and stayed true to our science. These names are being used by airlines and mayors. They’re being used by emergency management. It shows we have an important role in the fabric of America’s local preparation.
Q: Any comment about WeatherNation [the much smaller weather network now used by DirecTV.]?
Kenny: Our battle is with DirecTV, not with anyone else. When DirecTV called me and said they were putting up WeatherNation, I congratulated them. Competition is fine. If you want to have more than one option, so be it.
Q: But are they really competition?
Kenny: Let’s see what DirecTV subscribers are now missing. They’re missing closed captioning. They’re missing real-time weather. What we do is live, not a taped loop. They’re missing field reporting. They’re missing millions of dollars in investment to localize the weather, which we do all the time at the bottom of the screen.
Q: There is a theory you’re cannibalizing yourself with your apps and website.
Kenny: Ninety percent of the folks following Sandy got their information from TV. It doesn’t cannibalize. It engages people with multiple sources. It deepens their engagement. A vast majority of our audience uses both TV and digital.
Q: What are your revenue streams outside of the cable network?
Kenny: The digital business is ad sponsored. That does well. We have a healthy b-to-b business, a lot of subscription revenue. We have 121 airlines who managed 50,000 flights a day with us. We have energy traders. We have insurers. We have local television stations who gets forecasts and graphics.
Q: Will this DirecTV dispute lead to cuts in staff?
Kenny: We need these people. It’s regrettable where we are with DirecTV. I wish they’d come back to the table. I’m ready when they are. We can continue to build the audience we do have from the 80 million households for now. Cutting is not our focus.
Q: Independent of the DirecTV issue, how do you feel the network is doing?
Kenny: We’re executing pretty well right now. We’ve continued to do great television. We have Sam Champion’s show in development. Web numbers are hight. Customers are happy. We have the right to stand up for ourselves. The company is very strong and continues to execute.
Q: How did you hook Sam Champion from “Good Morning America”?
Kenny: We have a lot of ambitions, especially in the mornings. We beat CNN on some days. It was clear we’ve had momentum and we wanted more. How do you find someone with some breadth but also loves the weather? I think he was excited by a new adventure. He had done the other thing for awhile. We had dinner with him. When we told him our plans, he got excited. It’s going to be very different from anything else in the morning. The core group will love this optimistic, energetic way he approaches the weather.
Here are the annual Weather Channel ratings trend the past ten years: