Will Oprah's Move to Cable Dampen the 'Oprah Effect'?

What the Talk-Show Mogul's Move Says About the Future of TV

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NEW YORK (AdAge.com) -- Oprah Winfrey's decision to end her long-running syndicated program is a bet on the future of TV -- that niche cable channels, with their dual revenue streams from advertising and subscriptions, will be a more stable media base, and that technology will allow any content provider to reach its core audience in a more direct fashion without having to be seen at a certain time of day and on a certain channel. But the move may end up diminishing her power as a mover of products.

Advertisers spent approximately $198.6 million in the first eight months of 2009 on 'The Oprah Winfrey Show.'
Advertisers spent approximately $198.6 million in the first eight months of 2009 on 'The Oprah Winfrey Show.' Credit: Giulio Marcocchi
Like "Monday Night Football" before her, Ms. Winfrey is moving to cable, specifically a new Discovery Communications joint venture called the Oprah Winfrey Network, or OWN. A website designed to promote the new outlet promises: "Oprah will be with us every day. She's the life force of OWN and will get a chance to explore all of her passions on the air." OWN will be "a 24/7 cable network devoted to self-discovery, to connecting you to your best self and to the world. That's right. 24/7. All day and all night. Whenever you want. TV designed to bring more better into your life. It's about time."

While launching in 70 million homes gives the fledgling network some instant traction, its ability to draw an average of 6.8 million people (season-to-date through Nov. 8, according to Nielsen) would be in serious doubt, media buyers suggest. "If she took her show and went to cable with it, it wouldn't do as well," said Ira Berger, director-network broadcasting at independent agency Richards Group.

And that's the risk in the new Discovery Communications venture. "The jury's out," said Mr. Berger.

Yes, Ms. Winfrey is a top draw and has done plenty to boost not only her own brand, but plenty of others as well (known as the "Oprah effect"). A good word from her can sell thousands of books, and a discouraging one can bring down the wrath of a nation, as the cattle industry learned in the late '90s when, during a show on mad cow disease, Ms. Winfrey suggested she might never eat another hamburger. Texas cattlemen sued the host, claiming she had made defamatory remarks that cost the industry millions. (Oprah won that one.)

It's not clear that she will have that sort of power in the years to come. Howard Stern left mainstream radio for satellite radio and has largely dropped out of the national conversation by doing so. Nor did Ted Koppel's move from ABC News to Discovery result in a broad spotlight being cast on his activities.

In a statement released today, Ms. Winfrey's production company, Harpo, said she will continue doing her current show until Sept. 9, 2011, completing 25 seasons. Then she intends to "appear and participate in new programming" for Discovery's Oprah Winfrey Network, or OWN.

Advertisers spent approximately $198.6 million in the first eight months of 2009 on "The Oprah Winfrey Show" or on local stations when they aired the programs, according to TNS Media Intelligence. They spent $147.1 million during the same period in 2008, according to TNS. But marketers got untold value from Ms. Winfrey endorsing things on her own, or finding ways to integrate products into the fabric of the show itself.

In 2004, she gave all 276 members of her studio audience a new Pontiac G6 sports sedan. That same year, an appearance on her program by the then-CEO of Build-A-Bear sparked worry among analysts that, in subsequent years, the company might not be able to match the sales spike that resulted from it. And she has also incorporated Unilever's Dove products into the show.

Can't buy sincerity
One reason the endorsements work is that they largely hinge on Ms. Winfrey's actually liking the product, author, service or image. A 2004 reference on her show to Boudreaux's Butt Paste sparked 70,000 hits to the brand's website and crashed it. The talk-show host and her producers have long claimed they don't accept pay-for-placement deals, which just means public relations people work all that much harder to try and score a mention.

So her move could make her less of a marketing bullhorn, and it will likely cause larger problems for broadcast TV, to boot. The shift to cable will deal a blow to CBS Corp., which has distributed her program for years (the company purchased Ms. Winfrey's original distributor, syndicator King World), and to ABC, which has many stations that broadcast "The Oprah Winfrey Show" daily. In a research note issued today, Wells Fargo Securities analyst Marci Ryvicker estimated that "a 1% increase in advertising will offset any potential loss of this revenue stream" for CBS, but that ABC stations will face "the biggest risk." An ABC spokeswoman declined to comment on the company's plans for replacing Ms. Winfrey's show.

One buyer suggested doing so will not be easy. "The local stations will be disappointed to lose their No. 1 show" in what is known as "the early fringe daypart," said Debbie Basham, local media director at Interpublic Group's Mullen. "A lot of them had that as their early lead-in to early news for many, many years. Not having that anymore will probably have an impact," she said.

Syndication has many success stories, among them Time Warner's "Ellen DeGeneres Show," as well as many programs spun off from personalities with "Dr." in front of their names that first appeared on Ms. Winfrey's show. But Ms. Basham doesn't believe any of them are capable of capturing Oprah Winfrey-like ratings. Indeed, Ms. DeGeneres's program nabbed an average of 2.78 million viewers season-to-date through Nov. 8, according to Nielsen, while her biggest rival for viewership is her protege, Dr. Phil, who captured an average of 3.75 million in the time period.

Of course, by the time the OWN channel actually launches, technology may have already leapt ahead. Ms. Winfrey will have to be a savvy observer of consumer media habits, as well as a popular figure who inspires many to do well in this new arc of her career.

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Contributing: Andrew Hampp

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