When Frank Batten launched The Weather Channel, an around-the-clock cable channel devoted to, well, weather, skepticism rained down like a bad storm. The critics' chorus grew even louder when TWC, losing a million dollars a month, came close to shuttering its doors for good. But in typical can-do fashion, Batten persuaded cable system operators to bail out The Weather Channel and give it another chance. Today, The Weather Channel reaches 80 million customers, and is one of the great cable programming success stories.
And Batten proved to be one of the great entrepreneurs and leaders in the world of business.
Batten began his media career in the family run Landmark Communications Inc. (and its earlier incarnations), in Norfolk, Virginia. He started as a copyboy for the Norfolk Virginian-Pilot, then owned by his uncle. After graduating from the University of Virginia, a stop in the Merchant Marine, and earning a Harvard MBA in 1952, Batten returned to the newspaper as a reporter and ad salesman. In 1954, at 27, he was named publisher of the Norfolk Ledger-Dispatch and the Virginian-Pilot.
He earned his spurs by guiding his paper to champion the cause of school desegregation, an unpopular stand in Virginia at the time. "We were basically the only newspaper in Virginia that opposed massive resistance," Batten says. The paper earned a Pulitzer Prize in 1960 for that work. Beyond the newsroom, Batten encouraged employees to become involved in the community. He continues to be an outspoken proponent of free speech and a friend to education.
In 1964 the company purchased its first cable television system, the precursor to dozens more cable system acquisitions over the following decade. He bought or started eight daily newspapers, more than 100 non-daily papers and magazines, and several television stations. He partnered with Cox Enterprises to start Trader Publishing Co., a national publisher of classified advertising publications. But he didn't stop there. He bought ten daily newspapers, more than 100 non-daily papers, magazines, radio stations, and more television systems, combining them all under the name Landmark Communications in 1967. In 1994, Landmark sold its TeleCable systems to Tele-Communications Inc. (TCI) for more than a billion dollars.
The Weather Channel was born in 1982. After barely surviving its early years, TWC has thrived ever since. In 1996 The Weather Channel expanded internationally with interests in Europe and Latin America. Its companion Web site, weather.com, averages more than 300 million page views per month.
In 1979 Batten faced his biggest challenge. Batten, a nonsmoker, suffered from throat cancer and had to learn to speak again.
In 1997, Batten stepped down as the chairman of privately-held Landmark, but he remains head of the Landmark Foundation, the philanthropic arm of the business that has helped many organizations. Over the years, his contributions to his community have been enormous, from helping to build Norfolk's Old Dominion University into a high-quality urban institution, to serving on the Virginia Council of Higher Education, to funding the Batten Center for Entrepreneurship at UVA's Darden School of Business. During his career, Batten was active in media industry affairs, having served for five years as chairman of The Associated Press, the world's largest newsgathering organization.
Batten's book on TWC, The Weather Channel: The Improbable Rise of a Media Phenomenon, was published by Harvard Business School Publishing.
Interviewer: Amy Blitz, HBS
Interviewed in February 2000
My father died when I was an infant. I was really raised in my uncle's household. My uncle became, in effect, my surrogate father. He was the biggest influence on my life. He had been a remarkably successful entrepreneur himself in the newspaper business. He had started off penniless, and through bearing and ingenuity, I guess, he was able to acquire a number of newspapers. He became my benchmark guide throughout most of my earlier life.
I was influenced also by my education, particularly by my prep school, Culver Military Academy, where I had wonderful experiences at a very young age, with opportunities for leadership that helped motivate groups of people. I was given a remarkable opportunity by my uncle after I went through college and went to Harvard Business School. Just two years out of Harvard Business School, when I was only twenty-seven, he put me in charge of the newspapers of Norfolk, Virginia, and of course that was an enormous challenge for someone as inexperienced and as young as I was.
He was a person of very strong character. He was totally honest in everything he did in his dealings with people, then with his company and with customers and everything. Beyond that he was a risktaker. He acquired his first stake in a newspaper. He was selling advertising for a trade publication and he came to Richmond and thought he saw in Virginia an opportunity to develop much better newspapers. There were a lot of papers that were competing and he had established such a reputation in selling advertising that the owner of a failing paper in Virginia offered him a half interest in the paper if he would take it over and manage it and make it profitable within a year. He did that and that's how he got his first stake in a newspaper. He later he acquired one of four newspapers in Norfolk, which he eventually ended up consolidating into one company.
An unpopular stand
One of the most difficult experiences I had in my career was during the early days as a newspaper publisher. In Virginia, the Supreme Court decision to integrate public schools caused massive resistance, and the idea was that if any public school, if any black person was brought into a school that had been essentially white, Virginia would close the school. That became an enormously contentious issue within the population. I would say that the majority of white citizens were opposed to integration in schools.
We took a very strong stand on that with our newspaper. We opposed mass resistance. It created an enormous amount of anxiety in our organization, because we had a lot of vitriolic attacks on the newspaper as a result of its positionwe were basically the only newspaper in Virginia that opposed national resistance.
At the time we had two newspapers. The editor of the afternoon paper, the Norfolk Ledger, was in favor of mass resistance and one of the things I had to do during this period was to go in and require the paper to reverse its editorial position. I had to write the editorial myself to reverse the position because the editor did not want to do it. From then on another editor wrote the editorial position of the afternoon paper.
It was sort of an agonizing thing for me to do, because that editor was a fine gentleman and I had to reverse his position without humiliating him. It was not easy, but it was something I felt had to be done. We got a lot of flack from the community, from some elements in the community, but when the day came that the schools in Norfolk would integrate, they were done with no violence, no physical confrontation. I think a lot of that was due to the fact that the editorial position urged moderation by the people.
Finding growth in cable
For ten years, I really struggled to learn the newspaper business. I was very inexperienced and I had my hands full developing this newspaper and making it a stronger paper, building a stronger organization, developing the market share into a stronger paper. Then after about ten years, I felt enough confidence to start looking for growth. The only way to grow really was to get out of the confines of the geographical area that our local newspaper served. So we started looking for opportunities. We really...didn't have the capital to compete with companies like Gannett and Knight and Newhouse acquiring other newspapers. So we started looking for something that was undiscovered, that was new and in the early stages of development. We settled on cable television, which was then really in its infancy.
It was really just a central antenna service, serving and bringing in clear television channels into very small communities. So we started acquiring franchises in communities like that to build cable systems and we thought eventually it had [major growth] potential. We actually bought our first cable franchise in 1964. Over the next fifteen years we build a very substantial cable company, one of the larger multiple-system operators and it developed into a wonderful business. We thought it was something that we had the capacity to manage successfully, because the market end of cable is not much different from market in the newspaper circulation. But what we saw in it was the opportunity for cable to go into bigger communities.
Initially there was no particular market for cable to come into the city, because they already had clear television pictures, but something interesting happened. Ted Turner started expanding his Atlanta television station and other cable systems by delivering it by microwave. The cable companies were using that additional programming to sell to subscribers in places up to the cities. So that sort of opened the door to let cable get into the bigger communities. Of course HBO came along also. They were really the first two independent programmers that were delivered outside of the local communities, delivered by cable.
We didn't buy going cable systems, we essentially acquired franchises and built the systems ourselves. By the late 1970s, most of the cities in the country were wired for cable, and it became clear that there was not a lot of opportunity for us to accrue much bigger in cable, that is except through the growth of the systems that we already had.
The Weather Channel
We started looking again for another opportunity and something that was new and undiscovered and we settled on cable programming because about that time the satellite had come along and had made it possible for programmers to deliver programming internationally at a very economic rate. It would have become prohibitive to do that with microwave. When the satellite came along it became clear there was going to be an opportunity to develop a lot of new programming services that would give cable much room to grow in bigger communities, would expand their offering to their customers. We first started looking at a cable news network and did some work on that and then, about that time, I got throat cancer and was pretty much out of business personally for a couple of years, because I was going through...treatments.
After I learned to talk again we started focusing again on cable programming and we came across the idea of a weather channel, and that appeared to us to be something that would be quite needed because we recognized through our own newspapers and television stations that weather was something that people really needed every day. We thought the opportunity for The Weather Channel was to expand the availability of weather information by making it available twenty-four hours a day, so it would be much more convenient for people to get weather information if they didn't have to wait until the six o'clock news or until the next morning for the newspaper. They could get it instantly and that is what gave us the impetus to start a weather channel.
To start a new weather channel was really the product of our experience and we knew there was a high demand through a TV station center or newspapers. We came across the idea of what, interestingly, we had been looking for for cable programming. We had gone around and visited a lot of venture capitalists to see if any of them had come across ideas for programming. One of these capitalists sent us a business plan for a weather channel that somebody had brought them. They were not interested in it. We latched onto it pretty quickly. It was interesting that that business plan had been developed by a weatherman on network television, John Coleman...the weather man on Good Morning America, EEI.
I brought that idea to a lot of venture capitalists and a number of bigger media companies and had been rejected by all of them. The reasons we thought it would succeed were several. First was experience in our cable systems. The head of marketing of our cable company told us an interesting thing. He said in all of our cable systems we were offering very primitive local weather channels by simply providing text scroll across the screen and providing a camera site of dials that showed temperature and wind speed and that sort of thing. Very primitive, but he said whenever the power went out we got more complaints from people about the loss of that primitive weather channel than...programming. So that was sort of something that gave us a lot of confidence that this was something in high demand.
My interest in weather was developed through sailing. I had done a lot of sailboat racing for many years. I became sort of an amateur meteorologist, because learning something about weather and wind direction and how much wind we would have was very important in racing. I just became personally interested in weather. That was another incentive to me to go into The Weather Channel.
Rough weather ahead
We had a very disappointing and rough experience the first year with The Weather Channel. We were literally hemorrhaging red ink. We had assumed we could make it successful on advertising revenue alone. We were not getting any fees paid to us by cable systems for carrying the service. In the early years we were getting very little advertising revenue, so we were losing a million dollars a month, which back then was a lot of money. At the end of a year we, in addition to that, had a falling-out with the venturist who had brought us the idea and we had litigation over it and then that gave us a lot of publicity, on how much money we were losing and how badly we were doing.
So the cable operators realized that we were on our last legs and were about to fail and in fact we had decided to close The Weather Channel. We settled this lawsuit with John Coleman by giving him a thirty-day option to buy The Weather Channel, which we felt was dead anyway then. He could not raise the capital to do that but in the meantime a number of cable operators came to us and said we really need this service. "We would like you to keep it on and we would be willing to pay you fees to carry it?" A lot of the incentive was at that very time a number of other cable programming services were dying. CBS had a cultural channel and that had closed. ABC had a news channel and that was about to close and the cable operator didn't want to lose any more programming. So we decided to give it another try.
We decided to go out and in effect conduct a referendum with cable operators. We told them we would take three months to find out whether the cable industry would be willing to pay us fees and we opened our books to the cable operators and they realized from that we really were on our last legs. And so within three months about 80-percent of the cable operators had agreed to pay us fees.
Wanted: new growth
After we got The Weather Channel to a growth position where we knew we had a very great success on that end, we again started looking for other opportunities My son was a reporter in London for the Associated Press at the time. He sent me a publication that was classified advertising only in London. He had advertised his car for sale and sold it on the first day. He thought this classified publication was something we ought to look into. We did and we found there were a lot of them all over the country. It's called Trader Publications and they were essentially a Mom and Pop business. They were all locally owned by local proprietors and we started acquiring these Mom and Pop ventures with the idea of consolidating the business and making it more valuable by adding much more sophisticated marketing techniques and sales management and we built a very good company that way. [A company] in Atlanta was doing the same thing, acquiring a number of these publications, and we eventually put our two companies together into a fifty-fifty joint venture. So now we have a company called Trader Publishing Company and we manage out of Norfolk, but it's a very successful national business.
Later the Internet came along and we quickly realized that it brought a risk and a challenge as well as an opportunity to us. The risk of course was that the Internet would become a very destructive business in many ways for some of our media. It became another potential of becoming another main means of communication and a competitor for our newspapers and cable company, because we thought that would become particularly with weather a wonderful way to get weather information for people who are using their computers all day long. We started an Internet site in all of our media and we put a lot of emphasis early on our weather site. We got the ideal URL address, weather.com, and we were also able to use a brand of The Weather Channel, which had become one of the very strongest brands in the media business, that helped sell weather.com. We put a lot of resources in it and it's growing very rapidly. We are convinced in time that it will become a very large medium and a very successful one.
At the moment the business model for weather.com is based on advertising revenue and we think there is a very substantial market for that to grow into a very big medium with the big reach we have and the big viewer audience we have. Beyond that we are hoping to develop some E-commerce applications, I can't tell you what it will be because we are not clear about that ourselves, but we do think there will be opportunities for us to develop other sources of revenue in addition to advertising.
Beyond that, our business has always been essentially a content and marketing business. We have not done a technology business. It's clear now to us that we have to be a technology business also and so we have brought in a number of people who are very technology savvy and through them are looking for opportunities that we will use in communications and technology.
Why we go to work
Initially, my motivation for growing the business came out of my personal motivation to prove to my uncle and to myself that I was worthy of this big opportunity given me. Of course he had always been an entrepreneur, had grown and grown and grown, and that was my initial motivation. As time went on and I gained confidence and experience, I realized that creating new businesses and developing existing businesses into much more innovative and stronger businesses was a very rewarding experience and very highly exciting. So there was a lot of personal reward that came out of this.
We are a private company and as long as possible I want it to stay private. It's much more fun to operate a private company than a public one. We don't have to explain ourselves to professional analysts every quarter. We are able to take a very long range view on our business, which allows us to digress where we might otherwise stay...if we were public. In addition to that I have always felt providing superb products and services to customers was the main thing we needed to do to be successful and to be profitable, so our focus has been on staying close to customers.
I don't think the customers we serve are much different from one another. Essentially their motivations and needs are very similar to each other. The main adaptation we have to make is from one medium to another given that [Internet] customers are motivated in different ways from newspapers customers, and the same thing is true with television customers. I think the difference largely lies in the way people use various media. They, for instance, use the Internet for almost instant information, the same thing with cable television. For the newspaper it's not as much on the instant need as it is a need for getting any information in-depth and getting information they can think about and use in a longer-term way.
Ready for a change
One of the biggest challenges in a business that needs and wants to find ways to motivate employees, the natural human tendency is to stay away and not get wrapped up in something that's changing all the time. But I think we have created a climate in the company with most of our people to expect change and to enjoy it and to get personal rewards out of it.
We do a lot of market research. Take The Weather Channel for instance. We have done an enormous amount of segmentation research to find out how different people use The Weather Channel. One category is people who are intensely interested in weather, not only to get information they can use but that are interested in it just as you would be interested in an intellectual subject. They want to know all about how weather works and why. And then there is another group of people who are on the opposite extreme who simply want to hit and run, look at what they want to see, how it's going to affect their lives that day or the next day. And then there is another group of people who, for instance, want to know weather in a different place; they may have children who live in Minnesota and they want to find out what the weather is out in Minnesota and so there are all kinds of different ways that people use weather. We found employees are fascinated by this and we think we know more about consumers' interests and work than anybody else.
One of the other things we have tried to do with our organization and our people is to encourage them to take risks. That includes not only people who succeed with it but people who fail with it. We know to be successful in any kind of a risk-taking venture, you have to be willing to fail. We have had our share of failures and we don't penalize people for failures assuming that they have put their best effort into what they are doing. We have had a lot of people who have been in ventures that didn't work out, who have gone on to other ventures that did work out.
I'm not talking about new businesses but simply innovations within an established business. About thirty years ago I established something that we call our "Executive Stockholder Plan." We created a class of stock in the company that has all the rewards of stock ownership except voting power, and we have set up a system that allows managers in the company to acquire stock and the company finances the stock and gives them the ability to finance...the stock over a very long period and it's turned out to be a wonderfully successful thing, because we have several hundred managers who are retired now and about 30-percent equity in the company. Their stock has been a very successful financial investment for them. Much better so than they could have gotten in the stock market unless they had been lucky with one of these odd Internet stocks, but it has done something much more than give them financial rewards. It's something very different about the way you look at your job if you are an owner of the company and people feel a personal sense of ownership that gives them a lot more reward and gives them a stronger feeling about the work that they do.
Finding the best talent
We do a lot of recruiting. What we have found is, for instance, when we are attempting to build a management organization, that bringing people in when they are in school, particularly if they are in graduate business schools, we bring them in to do summer work and that gives them a chance to find out if this company's culture is attractive to them. It gives us the opportunity to size them up and decide whether we think they will be good long-term bets for us and we have a lot of key people in the company now who have come into us through that route. Of course the turnover rate we have in the company varies with the kind of job. When you have a manual labor job, like we have distribution of our newspapers, our turnover rate is pretty high. Our turnover rate among managers is very low, that's largely due to our stock plan. Probably more important it's due to the culture we have dealing with people. We made it a sin for managers to deal poorly with their people and we have given a lot of rewards to people who developed strong organizations, organizations in which people work successfully together and create teamwork. I think the main things that we have done that have been successful with people have related to the culture of the company.
We have created a value system which is very strong on having high ethical standards and one thing that I have never tolerated, and have created a climate that other people don't tolerate either, is the question about the integrity of people. That is number one as far as I am concerned. Their hardest decision to make, and decisions that I have had to make, relate to people, people you may have to fire, either for a breach of integrity or breach of our standards or for simply poor performance. It's very agonizing for me to have to fire people. I don't have as much of a problem when they have breached our standards of integrity but when people have worked hard and you simply have to let them go because their performance is sub-standard, that's very hard.
At the same time it's something that's absolutely essential. You have to be tough in insisting on good performance from people. If you are not that way, then you create a terrible climate if you tolerate poor performance. I think it's fairly obvious that when some venture we undertake is not successful, that the lack of success is due to the fact that there wasn't a business there or there wasn't a real opportunity, as distinguished form the lack of success because the people operating it were doing a poor job.
I have been very active in the newspaper industry, engaged in a lot of things that I thought would improve the performance of newspapers. The thing I did that required the most effort and time was becoming chairman of the Associated Press, which I did for five years. I devoted a lot of time to that because the AP had become sort of a self-satisfied organization and I was convinced that the culture of AP needed to be changed, so we have become much more demanding of satisfying their own customers. We made a lot of progress in that direction during my tenure as chairman.
Father and son
I have turned over the reins of the company to my son. He has taken my role as chairman. I'm not totally retired, because I'm still acting as the adviser and a consultant. I think that's my role today, but my role is also to stay out of the operation of the company, because that has to be run by people who are full time at it. I think beyond that it's time for a new generation to be running a company like ours. I will give you an example. I said earlier that throughout all of our career we had been a content and marketing company, not a technology company. Recently my son brought us an opportunity to become the principal investor in a very small little software company called Red Hat. I looked at it and the other folks in the senior management looked at it and we couldn't understand it. It was a software company. We particularly did not understand the open source software where you could get free software, and we talked my son out of taking this on to Landmark...and he made the investment himself personally and of course...it's worth about a thousand times what he invested. That made it really clear to me what I gradually thought about but had not really decided: that we had to become a technology company and we needed management at the top as well as throughout the company who thoroughly understood technology. I concluded I made the right decision and turned the company over to a new generation. I have just made myself available to my son and to others and to talk with the company to relate some experiences I have had when they are making decisions, particularly on new ventures and on innovations, and since the company is so focused on that now, there are a lot of new things going on. Some of it I don't understand. Others I think I can help and have helped with the thinking on what the company ought to look at when they look at a new venture.
I think the biggest factors in the company's success have been that we have put a lot of emphasis on developing a strong organization, we have put a lot of emphasis on developing people so that they could advance and take on more responsibility and grow.
I think we have had a very long-term horizon. We measure success on a four- or five-year basis rather than on a quarterly basis and I bet that has allowed us to do things that we might not have otherwise done. My role has been largely to build a strong organization and to set the standard for the company, to set the grade to climb it, have motivated people to not only do their jobs well, but also try to be innovative. Then I have pushed hard to encourage people to be dissatisfied with the status quo and to look for ways to change and improve. I think that push in the company has made us much more successful. I have made it clear at our annual managers' meeting, I have always talked and focused on looking for innovation, looking for new opportunities in our established businesses as well as in things we are not in. I think the other thing is we have rewarded the people with promotions and other means.
I have always defined success of a profession as making the most of the abilities and the opportunities you have been given, and also in doing it in a way that provides benefits to your community and benefits to the nation as a whole. In a personal sense, the main measurement I have used as a standard is how my children have turned out. Whether or not I have provided the kind of example and influence that have helped them become responsible citizens and people who are going to do the best with what they were given. Of course my son, as I said, has taken over the company and it's been about eighteen months and I think he has done a wonderful job. I think he is bringing something to the company that I didn't, which was a view of the new economy as it's developing that is very forward-looking. So I think he is the right person at the right time. That makes me very proud and the thing I have taken the most pride in is the building of a company that everybody works for it can be proud of because of our standards, our standards of ethics, and now the standards of integrity and the emphasis we put on providing good products and service to community, and also the emphasis we put on being a good corporate citizen...
I think business leaders who have been successful have an obligation and responsibility to give back to the society and to the community and personally I have always expressed that by participating in things outside of the business that were valuable to other people. In my case I have focused on education and I have participated in leadership roles in a number of educational institutions. I have sort of concentrated my own personal philanthropy on education. At the same time I think the company we have built, if you really think about it, to the extent we produce a good newspaper, a good weather channel, this in itself is a public service. For years I have felt that education is one of the strongest ways that we can preserve the free society we have and the strong economy we have, because I think what education does is to allow our society to be an open society, to be a classless society. The people at the lowest rungs of society I've seen have had their children get educated and progressed to levels way beyond their parents and that's very rewarding to see, but I think it's what keeps this society an open society.
As valuable as anything else, is to build a business that, I hope, will be a business that lasts and its values last. There is sort of a debate now between people who think businesses should be built to last or should be built to flip. There is a new generation of people particularly in the Internet world who think that you should create a business to sell and make a lot of money real quickly. I'm from the other school and I hope that I have laid a foundation for a business that will last, because the great companies in America have been the ones that have built lasting businesses and as a result they have made a big contribution to the economy and to the world.
I kidded George Steinbrenner that the biggest mistake I ever made was not buying the Yankees because I had a chance to buy the Yankees before he did. I didn't have enough confidence in my knowledge of the baseball business so I passed on it. I wouldn't have fired as many managers as George has, but I'm not sure I would have produced any more winners.
I have tried to think of a piece of advice my uncle gave me when I first took on this big job at age twenty-seven to run his newspaper. I asked him, with I'm sure some anxiety in my voice, what piece of advice he would give me. He said just keep your bowels loose. I would leave that as good advice for any entrepreneur, to stay loose.