Scott McClellan/2B1
Sunshine is pouring through the oversized skylight of the Weather Network's head office in Oakville, Ontario, when Pierre Morrissette walks into the foyer. It is a perfect day outside. The sky is cobalt blue and there isn't a cloud in sight.
"Days like this are horrible for us," declares the CEO and majority owner of Pelmorex Media, the parent company of the Weather Network. When the sun is shining, people go outside, and the Weather Network hemorrhages viewers. But there's a silver lining to the cloudless day. These conditions won't last forever-and that's why his 24-hour channel exists, and thrives.
The Weather Network was launched in September, 1988, as a low-budget operation that immediately became the brunt of jokes (24 hours of…weather?). But in the years since Pelmorex bought the Weather Network and its French-language sister, MétéoMédia, the company has quietly risen to singular prominence on the Canadian television landscape. Revenues-monthly cable fees from 11 million subscribers, and advertising from steady sponsors such as Tim Hortons and Claritin allergy medication-are approaching $100 million a year. And the business has stayed solid even during the recent economic bad weather.
Pelmorex is one of the few large independent broadcasters left in the country, having resolutely ignored the siren call of consolidation. Morrissette does have one important partner: a consortium comprised of NBC Universal, Bain Capital and Blackstone Group, which inherited a 49% equity share and a 29% voting interest in Pelmorex when it bought the U.S. Weather Channel in 2008. But since that investment is essentially passive, Morrissette is his own man.
And the 63-year-old is a popular fellow among broadcasting executives: Not a year goes by that he doesn't get a buyout offer. And though he won't disclose names, the list has included pretty much everyone in the Canadian media sector, along with a smattering of private equity players and institutional investors. But Morrissette's answer never changes: "You'll have to negotiate with my great-grandchildren."
Why such resolve? It's simple: Morrissette is not done yet. By the end of the decade, he wants Pelmorex to be one of the most pervasive media properties in Canada-on your TV, on your browser and on your cellphone. That means transforming the Weather Network from a TV channel you might turn on in the morning as you get ready for work into a critical information source that you simply can't live without.
Down the hall from the studios where the Weather Network's on-air personalities ply their trade in four-hour stints is a room redolent of new electronics and squeaky-clean floors. It looks like a typical broadcast booth-but it boasts a power that no other TV studio in Canada possesses. This is the nerve centre of Pelmorex's new nationwide emergency alert system. With the flip of a switch here, the company can issue a warning, whether it's a weather threat or some other type of public emergency, whenever it's deemed necessary by police and government. At the discretion of local broadcasters, the alerts will go out on TV and radio signals across Canada.
The system went live in June, but is only gradually getting to critical mass, since some of the multifarious municipal, provincial and federal bodies involved are still perfecting their side of the operation. When fully functional, it will be the first time Canada has had a national alert system on television.
Given the numerous examples of the populace being blindsided by attacks of extreme weather-the 1998 ice storm in Ontario and Quebec, for instance-a national warning system has been a priority of the federal government for more than a decade. Pelmorex scored big-time in 2009, when it was granted the rights to operate the alert network by the Canadian Radio-television and Telecommunications Commission.
The CRTC needed a company with the technical know-how to make a warning system run. And since the Weather Network has been inserting local data into its national broadcasts for decades, thanks to technology installed at 1,300 cable distribution sites across the country, it was a natural fit.
However, as a quid pro quo for taking on the responsibility and the investment needed, Morrissette argued successfully that the Weather Network should be endowed with "must-carry" status on the basic tier of the TV dial. That means every cable and satellite carrier in the country is required to pipe the Weather Network and MétéoMédia into the homes of customers on basic cable, and those customers have to pay for the service.
"Must carry on basic" is a coveted but dying breed of licence, since the CRTC will do away with the designation for most cable channels in the next few years. The Weather Network, however, can sit back and continue to collect a guaranteed rate of 23 cents a month for each home it reaches. A revenue stream of $30 million a year that might otherwise be eroded has instead been locked in.
It is enough to make other cable channels, especially the struggling ones, seethe with jealousy. But as Morrissette points out, winning the bid for the alert system didn't come easy. Beyond providing the technology, Pelmorex had to agree to live with its current monthly subscriber rate.
Public safety was a powerful lever for Pelmorex during the CRTC process. "I am convinced we are a channel that has saved lives before," Morrissette says, referring to the Weather Network's road report database. The channel sees its broadcasts not as entertainment but as potentially crucial viewing. Indeed, people crave information when the weather gets the most unruly-so viewership and Web traffic spikes accordingly. Not surprisingly, audience numbers shot up the day a tornado hit Pine Lake, Alberta, in 2000 and killed 12 people.
"That was my worst day on air," says Chris Murphy, one of the channel's presenters. "We're told to go on, you have to put a smile on your face, but there was no happiness that day. The weather is so often like that."
When a wave of 19 smaller tornadoes battered Ontario one day last August, the Weather Network's viewer numbers again soared, to 1.9 million-one of its highest ratings ever. "It was terrible that one person lost their life at the beginning," Murphy says. "But I'd like to think that without the Weather Network, and Environment Canada issuing the weather watches, it could have been a lot worse."
Pelmorex has spent the past two decades amassing vast stockpiles of weather statistics to create databases that, in some respects, are even bigger than Environment Canada's. In addition to the road-conditions database Pelmorex owns, the company also oversees the largest proprietary UV index in the country, along with air quality reports and other weather-related information. To sift through this sea of numbers, the company employs 40 meteorologists, who also use data made available from Environment Canada, and build upon that information with their own forecasting models.
But the weather wonks are outnumbered by 60 writers of computer code who constantly build out the website and mobile applications-new ways to present the information to the public. The strategy is to be constantly repackaging the weather for niche audiences, making the service a habit for its users. There are weather reports tailored for everyone from boaters and skiers to dog owners and gardeners.
The next major frontier for the code writers will be a mapping project that will link the burgeoning world of global positioning on phones to weather forecasts pinpointed to the user's location. "We put in place a corporate development team and we've said, 'Your job is to develop new profit centres,'" Morrissette says.
The goal, as the effort put into the alert system suggests, is to expand the Weather Network beyond weather itself. In 2008, Pelmorex won a licence from the CRTC to operate the Environment Network, which would show everything from news and science programs to weather-related films such as The Perfect Storm. The idea was put on the back burner during the economic downturn-but it still shows where the company is headed.
"You could say everything we do is weather-related," Morrissette says. "But the term 'weather-related' takes you down quite a few different paths."
The single biggest factor behind the Weather Network's creation had nothing to do with television. The channel got started because of oil prices.
The 1980s were a rocky time to be in the energy business, or to be running related companies like Montreal-based engineering giant Lavalin. The decade began with record oil prices followed by a protracted slump. When crude fell, oil and gas work for Lavalin's engineers began to dry up. By 1987, the company was looking around for ways to diversify. One of its ideas was television. Having been impressed by the creation of the Weather Channel in the United States, Lavalin CEO Bernard Lamarre approached the channel's founders for assistance in starting up a Canadian version. (This is a not-atypical provenance for Canadian specialty channels.) Virginia-based Landmark Communications, the company behind the Weather Channel, put up $400,000, but, more importantly, it also helped with programming.
However, Lavalin was an engineering company first and a broadcaster second. "They did a great job of building an infrastructure and creating technology that was the essence of the business," Morrissette says. But when the company fell on hard times, the broadcasting operations became an afterthought. Under pressure from his bankers to sell assets, Lamarre put the Weather Network and MétéoMédia on the block in 1991. (Lavalin successfully merged with rival SNC that same year.)
Morrissette, who grew up in Montreal, had spent much of the '80s at the helm of CanCom, a company that pioneered the use of satellites to deliver TV signals to remote markets. He later launched Pelmorex, which owned small radio stations in rural Ontario. When Lavalin began shedding assets, Morrissette went to his board and bluntly informed them that the Weather Network presented an opportunity that was too good to pass up.
The board members, he recalls, looked at him like he had lost his mind. "The first question was: 'Who watches the Weather Network?'" But Morrissette saw a powerful angle. Lavalin had built a technological marvel-a system where screens reporting the weather in each city could be dropped into the feed in that particular region, allowing local forecasts to be done from a national platform. No other national channel could localize so adeptly. But even though it had mastered this challenge, Lavalin hadn't bothered to build an advertising business. The early Weather Network was run entirely on subscriber revenue.
"As an acquirer, I knew there was a very attractive upside in converting them from an engineering project to a media company," Morrissette says. It took two years for the deal for the reconfigured Weather Network to clear the CRTC.
As of 2009, spots on TV alone were worth $19 million to Pelmorex (which sold
off its radio stations as part of its makeover). Including the Web, advertising makes up more than half of revenue and has fuelled years of growth. The channels' head count has grown to more than 350 from about 125 in 1993. And in that time, subscriber numbers have climbed from five million to about 11 million. Between TV viewers and Web audiences, Morrissette estimates the Weather Network and its sister station are used by about 18 million people a month in one form or another.
But the reality facing the Weather Network is that nobody owns the temperature. Weather data is readily available from many sources, including Environment Canada-though not in the same depth that Pelmorex compiles. The company will perish if it doesn't stay three steps ahead of potential rivals by trying to push the boundaries of what it does.
One frontier is innovations in broadcasting. In its relatively short lifespan, the Weather Network has bent the rules on traditional forecasting in order to repackage data in ways that Morrissette thinks
When he first proposed doing a 14-day forecast, he got pushback from his meteorologists, who said the idea wouldn't work: The data just couldn't be sufficiently accurate to predict that far out. But Morrissette figured viewers would get behind it.
"The meteorologists were very concerned about doing it from a scientific point of view," Morrissette says. "I just said, look, any government or business will make an economic forecast. And the farther out that you go, the more understanding there is that it is more of a trend, rather than a precise expectation."
The same science-vs.-commerce debate took place when he wanted to develop an hourly forecast. "And it's turned out to be one of our most popular products."
But reframing forecasts will only go so far for the Weather Network. The future is in the new platforms that Morrissette is so keen on-and in a different class of clientele than the general public.
The company already does a robust business selling weather data and high-end analysis to a variety of businesses and government clients, from the energy sector to provincial transportation departments. Among its clients is Rogers Communications, which needs to have all the weather data it can possibly get before it decides to open Toronto's domed stadium-hence the corporate wallet-for Toronto Blue Jays games.
That sort of information commands a premium. And if the weather gets wilder on this warming planet, it may be bad news for the rest of us-but Pierre Morrissette will have a lock on another swelling revenue stream.
THE PLEASURES AND PERILS OF PRESENTING THE WEATHER...
It's been seven years since Scott Simms signed off for the last time to make a successful bid for federal office, but, as far as the public is concerned, he's still that guy who does the weather forecast. "To this day, I walk into airports and have people coming up to me saying, 'You're the weather guy!'" says Simms. "They say, 'What do you do now?' And I say, 'Well, I'm in politics now.'" It's one more bit of proof that people love talking about the weather-a fact that has had no small part in ingraining the Weather Network in the Canadian psyche. Simms, who was elected in Newfoundland's Bonavista riding as a Liberal in 2004, gives much of the credit for his victory to the face time he logged on TV delivering temperatures to his neighbours. After a while, people just get comfortable with you, Simms says. "The secret for any weather personality is to actually crawl through the television, sit in the living room and have a cup of tea-have a little conversation-and then at the end say, 'By the way, when you go out tomorrow, bring your umbrella,'" says Simms. "It's a very personal experience." Current Weather Network broadcaster Chris Murphy knows the downside of that relationship. "Our viewers are very savvy," he says. "Unfortunately, I'm in the business where when I'm right, no one remembers. And when I'm wrong, no one forgets."Experience has taught Murphy that certain aspects of nature are sometimes beyond the ken of meteorologists and weather presenters. "A notorious province is Alberta, because it's all wind-driven," he says. "We once had a forecast of 15 or 20 degrees in Calgary in mid-February. And I was selling this thing like a furniture store going out of business. Well, it snowed that day. It was two degrees and miserable. We had people call in. There were no death threats, which I certainly appreciate."
AND THE HOW-TO, IN SIX EASY STEPS
1. Pause and affect "Don't try to jam too much information in there. Pause, pause, pause, pause. That's what gets people's attention."- ]cott Simms
2. Paint a picture "Don't drown people in the science. If the sun is going to come out in January, I'll refer to it as a fake fireplace: It looks nice, but it's not going to warm you up."-Chris Murphy
3.Find your inner thespian "It's unscripted, ad libbed, and there's no one else in the studio except us. So it's a live performance, not unlike the stage, except the lines are different every day."-Suzanne Leonard
4. Do the math "Let's say it's raining. It's plus 4, but it's going down to minus 7 tonight. That's the straight goods, but you've missed the story. The story is, when you come home tonight, look out, you could probably skate your way home."-Scott Simms
5. Plan carefully for your four hours on air "It's a tricky balance. You want to eat as late as you can, so you've got that fuel to get you through, but early enough so that you can digest it, so that you're not re-enjoying it on air."-Suzanne Leonard
6. Respect history "I have come to learn that when there is a west wind in Alberta, it's going to be warm; when there is a south wind in Toronto in the summer, it's going to be humid. And nothing good has ever come from an east wind."-Chris Murphy
Grant Robertson