Oprah: Will the Queen of Talk Be Cable's Last Word?
Slapping Oprah Winfrey's name on something usually makes that thing a success. As it prepares to flip the switch on the Oprah Winfrey Network cable channel on Jan. 1, Discovery Communications (DISCA) is betting that streak will hold. "This channel will have her name on it," says Christina Norman, the former MTV president who is now OWN's chief executive officer. She says the channel could be profitable within three years. "It's something that [Oprah] doesn't want to be anything but great."
Still, the network, which Oprah's holding company Harpo will own jointly with Discovery, is not a sure bet. Some cable and satellite operators are resisting Discovery's demands for fees triple what they are paying for Discovery Health, the channel being converted to OWN. Advertisers coaxed aboard with a personal call from Oprah will want to see healthy ratings. "No one has ever created a whole channel with original programming [like this] from scratch," says Ron Schneier, chief operating officer of online advertising service MyVideoRights and a former executive at A&E Channel. "It has its share of risks."
Viewers won't see Oprah 24/7. The 56-year-old host to 7.2 million TV viewers can't have a daily talk show on the cable channel until September, after her syndicated program ends its 25-year run. For now, she's committed to appear on OWN only 70 hours a year, and will be seen on specials and a reality show chronicling her program's final season.
Instead, Oprah has become her network's programmer-in-chief. To close a deal for a talk show by Rosie O'Donnell, Winfrey hopped on a jet with Norman and former Viacom CEO Tom Freston, her consultant on the channel, for a sit-down at the comedian's New York-area home. She convinced Duchess of York Sarah Ferguson to do a six-part series of documentaries by e-mail. "You don't say no very easily to Oprah," says Freston.
Discovery, which has agreed to loan OWN $189 million, is pressing cable and satellite TV systems to pay three times the 7 cents per subscriber it was getting monthly for Discovery Health. DirecTV (DTV) has so far refused, waiting for its existing deal with Discovery to expire in more than two years, says a person with knowledge of the talks. Norman says some operators are indeed waiting out their existing Health channel contracts, but may end up paying more if they wait: "I say, sign on now," she says. "I'm betting on OWN."
Former BBC Worldwide America President Garth Ancier, a former programming chief at NBC and Fox, says: "It's always tough to translate a single show to a channel. The key will be in finding talent and ideas that complement Oprah's tone." Ancier is confident Oprah will. So are advertisers, who are counting on the channel's "Live Your Best Life" slogan and its inspirational programming to win viewers, says Catherine Warburton, executive vice-president at the Universal McCann ad agency.
OWN will generate $101.7 million in ad revenues its first year, up from the $18 million that Discovery Health collected last year, estimates Derek Baine, an analyst with cable research firm SNL Kagan. He forecasts that Oprah and Discovery will spend more than $162.3 million next year on programming, a fivefold increase from Discovery Health's spending. At the outset, the channel will air a mix of new shows and reruns of The Best of Dr. Phil, advice programs from the likes of Dr. Mehmet Oz and Suze Orman, movies, and Mystery Diagnosis, a Discovery Health leftover.
Oprah's channel has already produced plenty of drama. OWN's president and two programming executives have departed, and the network is starting a year behind schedule. In August, Discovery nearly doubled its original $100 million investment—and persuaded Winfrey to double the 35 hours she had committed to being on-air. "We were just starting and really didn't know all the things we wanted to do," says Peter Liguori, Discovery's chief operating officer. Winfrey and executives at Harpo declined comment for this story.
Discovery has high hopes. "We think OWN has a very substantial opportunity," CEO David Zaslav told analysts on Dec. 7. The channel has been telling advertisers to expect an audience size similar to Discovery's TLC, ranked sixth among women aged 25 to 54—the same demographic OWN targets. OWN also is asking for the same lofty ad rates, says Brad Adgate, director of research at Horizon Media. General Motors, Procter & Gamble (GM), and retailer Kohl's (KSS) have signed on.
Still, star power doesn't guarantee success: Martha Stewart had a weak showing on Crown Media Holdings' (CRWN) Hallmark Channel this year, and her daily block of programming was pared to five hours from eight. OWN also faces competition from A&E Television Networks' Lifetime and NBC Universal's Bravo, two of the top cable outlets among Oprah's demographic. Says Bill Abbott, president and CEO of Hallmark Channels, "It will take time for the audience to find her." OWN's backers are counting on the power of the Oprah brand. Says Discovery's Liguori: "Martha is a personality. Oprah is a way of life."
The bottom line: With the launch of the Oprah Winfrey Network on Jan. 1, the TV host is betting big she can persuade millions of fans to follow her to cable.