Tells Magazine She Is Concerned About Her Investment

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NEW YORK (AdAge.com) -- Oxygen media needs to catch its breath after Oprah Winfrey expressed uncertainty about her investment in the venture that aimed to
Oprah Winfrey, 25% owner of Oxygen Network, isn't happy.
be a multimedia leader but is now primarily a limping cable network.

"Am I happy with it?" she asks in the April 1 issue of Time Inc.'s Fortune. "It is an investment."

Winfrey got a 25% founder's stake in the company in exchange for $20 million and rights to reruns of her famed talk show, according to Fortune. It's not the money that gnaws at her, but ceding the rights. And that, in turn, has to gnaw at Oxygen. The network is counting on the reruns to give it a lift when they begin nightly in September, with the chance to package shows in ways appealing to the female target, such as a hunk or self-help week.

Winfrey's frustration
Oxygen rep Laura Nelson says part of Ms. Winfrey's frustration may come from realizing that deciding how to package the shows is a difficult, highly personal task. "We've basically given her carte blanche to do whatever she wants," Ms. Nelson says. "But the man-hours required to do it are overwhelming."

Ms. Nelson also says Ms. Winfrey may be frustrated by the fact the network is often linked so closely with

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her. "She's just an investor," Ms. Nelson says. "And I think there is a misperception out there that Oxygen is Oprah's network."

A spokeswoman at Ms. Winfrey's Harpo Productions says she was not available for comment.

In the Fortune piece, Ms. Winfrey says she is "not uneasy" about Oxygen's future. But Oxygen's health may be slightly at risk as it enters its 26th month on the air. The network has trimmed its staff by some 40 people recently. Ms. Nelson counters the network will be profitable next year and that networks as high profile as ESPN did not exactly roar out of the gate. Oxygen brought in some $20 million-plus in ad revenue in 2000 and a slightly higher number last year; by comparison, Taylor Nelson Sofres' CMR shows powerhouse competitor Lifetime brought in some $648 million last year.

Unflattering ratings
This spring, Oxygen is expected to enter its first upfront selling period, where it will make ratings available to advertisers. But figures based on Nielsen ratings of cable homes obtained by MediaWorks don't offer a very flattering picture. For the top 10 U.S. markets, Oxygen posted a 0.17 average rating in prime time (12,867 homes out of a distribution of 7.5 million) and a 0.08 for total day for the period from Jan. 28 to Feb. 24. (The ratings actually only reflect nine markets since Oxygen is not in Boston.)

The figures are significant since Oxygen's target is the educated, upscale, multitasking female that tends to live in urban areas. Based on Nielsen ratings for full-year 2001, Oxygen's are in the neighborhood of a network such as Great American Country. Lifetime and WE: Women's Entertainment posted higher numbers over the same time frame in those markets. (Lifetime: 2.13 in prime time -- 478,325 homes out of a distribution of 22.4 million -- and 1.17 in total day; and WE, a 0.26 in prime time -- 28,008 homes out of a 10.8 million distribution -- and 0.14 in total day.)

"Oxygen has yet to create a franchise show ... and you struggle mightily until you get that," says Larry Gerbrandt, an executive at Kagan World Media.

Distribution picking up
Oxygen executives argue the Nielsen figures from the top 10 markets do not accurately portray its progress. They say it's only recently received significant distribution in all but three of the nine markets it's in, including New York and Los Angeles.

"There's usually a lag time of three to four months before people start to realize we're there and start watching," says Jo Holz, Oxygen's vice president of research.

Even in the markets where Oxygen has had significant distribution for some time, its ratings are low. Prime-time ratings in Dallas, Atlanta and San Francisco are 0.29, 0.22 and 0.12, respectively.

Executives say they aren't worried. Distribution is expected to be 44 million by 2003. And only now, they say, is Oxygen shifting its focus to sustained marketing, including a TV spot spoofing beauty pageants.

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