Among all the chatter about Oprah’s announcement that she’ll be ending her syndicated talk show in 2011, there have been all sorts of reasons floated in the media: declining ratings (true, but most syndicated shows have seen declining ratings recently), lack of money from local affiliates to pay the fees for another cycle of syndicated Oprah (quite possible), Oprah tiring of Chicago/the climate (couldn’t she have just moved the location of her syndicated show?), or some sort of Oprah obsession with milestones (wacky, but who knows).
Of course, it’s about the money, plus perhaps a bit of a new challenge (and a “been there, done that” attitude about the syndicated show).
I don’t know what Oprah might have made from another cycle of her syndicated show (and no one does, exactly), let’s look at a sliver of the potential economics for OWN (Oprah Winfrey Network).
OWN is scheduled to replace the Discovery Health Channel, and Discovery is planning to use the arrival of Winfrey on cable as leverage to demand higher carriage fees from cable and satellite operators.
Consulting firm SNL Kagan says Discovery currently gets about 13 cents for each subscriber for the channel. People familiar with Discovery’s strategy said it would try to hike the fee to as much as 50 cents per subscriber for OWN
via latimes.com.
Discovery Health is currently available in about 73 million homes. While it’s likely that its “Oprah-fication” would help expand that number (the most available cable networks are in 98-99 million homes), even if that didn’t happen, going from carriage fees of 13 cents/subscriber/month to 50 cents/subscriber/ month, increases the carriage fees from $113 million per year to $438 million per year. Apply a 5x multiple to that increase (would love to hear from someone in the industry what the current accepted multiple is) and the value of the cable network goes up by $1.6 billion.
Of course, increasing the household coverage would create even more value, and presumably there will be an increase in advertising revenues as well. Beating Discovery Health’s total day average viewership of 127,000 during October, 2009 doesn’t seem like much of a stretch.
Now I have no idea what portion of OWN will be Oprah’s (and what will be retained by Discovery), but any reasonable fraction of that kind of value is a lot of money. Even for someone like Oprah.
On a related note, would Chicago losing Oprah’s syndicated show/production company really be such a big blow? It certainly can’t mean that much on a relative economic basis to the 3rd biggest City in the US. It seems like that story is just part of the media herd nonsense being spun out around the Oprah announcement.
In so far as Chicago losing her show and production company moving to LA, not sure that would be a huge blow. The show only taped 3 days a week and was on hiatus for a several months out of the year. The studio facilities themselves will continue to be used by Rachel Ray, Dr Phil, and other productions.
Chicago’s loss is more sentimental and psychological than financial.
From what I’ve heard it’s a 50-50 split.
Given Oprah’s repeated support for psuedo-science, scientifically dubious — I am being kind — alternative medicine, and seriously dangerous anti-vaxxers like Jenny Mc Carthy, replacing any health channel except one that runs nothing but colon cleansing infomercials is a bad idea.
“If it ducks like a quack…”
last i heard oprah is worth $2 billion. last i heard she was making $250 million or so with her current show. even if that went down, its hard to imagine a cable deal being better than that but who knows. i dont think its about the money …not to mention her influence on cable will be substantially less than what it is now.
CK, I’m not sure what you’re talking about. Rachel Ray shoots in NY, and Dr. Phil shoots in L.A. Since Jerry Springer moved out last year, I believe the only national TV show left in Chicago is the weekly “At The Movies” show.
No, losing Oprah will not mean much financially to Chicago. But considering how much exposure she gave to the city and how closely Oprah is tied to it, it’ll be something of a blow to the city’s image.
>”last i heard oprah is worth $2 billion”
On the news last night, they used the number 3 billion.
I really doubt she’s doing anything for the money at this point. Power, maybe. To create a legacy for herself. To go from being the most powerful woman in the world to… whatever’s after that. Having a place in history (I don’t really think that’s an exaggeration, either. If Annie Oakley has a place in history just for being able to shoot a rifle, it’s safe to say Oprah will, for being the first woman to create an enterprise like that from scratch).
“Given Oprah’s repeated support for psuedo-science, scientifically dubious — I am being kind — alternative medicine, and seriously dangerous anti-vaxxers like Jenny Mc Carthy, replacing any health channel except one that runs nothing but colon cleansing infomercials is a bad idea.”
Hear,hear!!!
^Seconded
Oprah and Google are both on a march of expansion. I suspect Oprah’s next move will be her own operating system too. Maybe Snoprah Leopard or something. (The folks behind the Opera browser did once announce their Linux version as “Opera Win-free”.)
I doubt this is all about $$$ for Oprah. Ahem, she’s worth a BILLION dollars. I think she’s into her legacy right now (that’s what the superrich do – e.g. “Gates Foundation”, “Geffen Playhouse”, “Milken Institute”, etc.) and what better way to leave a big one than an entire network named after yourself. That’s where her focus will be, and I still think she’ll do some sort of talk presence on her new net.
It would seem to make more CENTS to stay in Chicago and use the current HARPO studio facilities if OPFRA moves her show to OWN.
Unless she wants out of Chitown, why leave?
Big picture of Oprah…really scary!
Yeah, she wants the kingdom itself, not just the kingdom’s gold.
P.S. If your kid got autism from mercury in the vaccinations, you’d probably freak out too.
LOL at Joseph’s comments seeing as I am typing this running the new Google ChromeOS preview released this week in a VirtualBox emulating Ubuntu Linux on a Windows 7 machine.
So next year I will be typing comments on OprahOS or maybe DocPhilBS or RachelRayYUM
I too doubt that Oprah is doing much for the money these days.
As to the carriage fees I think it is bad that we have to have bundled cable channels. To quote Bruce Springsteen “57 channels and nothing on”. If I could choose my TV channels and pay accordingly I would keep less than a dozen channels.
Lots of channels are getting carriage fees that they do not deserve.
Also then I would even be a Jon and Kate Channel free home!
Mike: Don’t forget Newton Minow’s remark about “vast wasteland”…
…today, it is a nuclear hola-caust by comparison…here’s what the cable companies and channels may be dreaming of saying, and wish they could say today in public…
“…hello, money, and to hell with the audience – if they don’t want to pay us $300,000,000,000 per day for each channel of Octomom, Olbermann, O’Reilly, Rachel Ray, and 28 dozen ESPN channels with nothing on, we will take a sawed-off double-barrelled shotgun, blow their commie, treasonous, anti-American, anti-free market heads off, and take all their money and women, so we can live on refurbished antique yachts in Tahiti, making Hugh Hefner’s life look like living in a Rio slum…”
“…of course, payment by you slaves to us, the cable companies and channels, will be by mandatory automatic debit, with the banks required to give the cable companies and channels a 59 percent kickback of the trillions of dollars in overdraft fees that this will generate, under the immediate threat of the same punishment you viewers will receive.”
How are the monthly cable fees negotiated per subscriber? It’s kind of strange that there can be so many MSOs but that the fee would be uniform. How does all that negotiation come about, especially when replacing a previous channel that already had a set per-subscriber fee?
One show does not sustain a whole network unless it’s called SpongeBob (and even then Nickelodeon has other shows routinely mentioned as hits at TVBTN). And what happens if a channel underperforms, as OWN might if its 50 cent+ fee doesn’t do top 20 channel numbers?
Bitely, any of the cable carriage fees we have on the site (including these) are estimates, I’m sure there are variations from MSO to MSO.
My (admittedly limited) understanding is that one show *could* have undue influence on carriage fees, in a “OK, if your subscribers want to see Oprah’s show pony up, or get ready for the angry calls”. NFL Network tried that with a *much* more limited show (8 regular season NFL games) and basically hit a stone wall with several MSOs. How OWN will do is anybody’s guess.
Actually, I discovered DirecTV because Cablevision wasn’t running the Yankees Network — I’m a Mets fan, my wife is the Yankees fan — and realized after 1 hour I’d never use cable again if I could help it. She’s even willing to stick with Satellite even though there’s the same sort of go-round with Versus, and she’s even more a hockey fanatic.
Thank you for the information Bill. It’ll be interesting to see how it competes with four news and two womens’ networks, since it looks like there are a lot of talk shows announced and its audience might land between the two.
We all know Oprah doesn’t need the money. It is about her place in the world. She is about to be the only person in the world to have an entire 24/7 network named after her. That puts her in the history books. If it were me (I wish) I would want to spend all my time insuring the success of a network with my name on it.
Now to the money. I have not seen a cable balance sheet for three years but 50 cents a sub is way out of line. That is not going to happen. Where did you get that number?
>She is about to be the only person in the world to have an entire >24/7 network named after her.
What about Ted Turner?
Turner founded three networks named after him, Turner Broadcasting System (TBS), Turner Network Television (TNT), and Turner Classic Movies (TCM), as well as the ‘non-eponymous’ Cartoon Network and CNN.
And — sorry, can’t resist — if anyone starts mentioning the various “Christian Networks,” the fact is that “Christ” (The Anointed One) is a title, not a name.
Maybe she could buy her own planet and move there. To another galaxy, far, far away…..in another dimension.
Artie, 50 cents / sub was quoted in the article linked above as being from SNL Kagan, which is where pretty much all publicly available carriage fee numbers seem to be sourced.
Are you saying that 50 cents / sub is way out of line for what OWN could hope to get? or in general?
As far as OWN getting that, your guess is as good as mine, it would put it above what nearly all other cable networks are estimated to get, but Oprah is a wildcard who’s value I cannot estimate.
richard less says:
“P.S. If your kid got autism from mercury in the vaccinations, you’d probably freak out too.”
The freakout precedes leaping to the bogus mercury connection. (And dude, get with the times–thimerosal has become passé among the anti-vax lunatic fringe.)
I love that chart:
http://tvbythenumbers.com/2008/12/31/cost-per-cable-channels-as-a-function-of-ratings/10102
Discovery thinks Oprah’s channel fees should be 50 cents? The chart shows other nets close to that carriage fee…like USA, TBS, Fox News, ESPN2…is she really gong to be pulling in that kind of value for Discovery networks? Maybe for one hour a day and then “regular discovery channel” territory for 23 hours.
I’ve read this figure before that Discovery Health Channel is in 73 million American homes and I’m calling B.S. on it. There are roughly 112 million households in the US, and I don’t even know what percentage of those has cable, let alone television to begin with. What I do know is that my cable company only provides that channel with one of the more expensive digital cable packages. They always have. And my cable company is one of the main providers in the country. No way do I believe that the majority of Americans receive Discovery Health channel. Maybe The Discovery Channel itself, but not this third tier offshoot.
I’ve seen the same things on other cable packages Paul and I think you’re right about Discovery Health. I don’t have any hard data though. Maybe it was meant to be 73 million total people in the households, not the number of households themselves?
It’s homes, not people, and 73 million homes is 25 million homes less than bigger networks like Nickelodeon and ESPN:
http://tvbythenumbers.com/2009/02/02/nielsen-cable-network-coverage-estimates-october-2008-update/11985