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Summary:

As companies like Yahoo (NSDQ: YHOO) make big investments into video content channels with name-brand film and television talent, they might…

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As companies like Yahoo (NSDQ: YHOO) make big investments into video content channels with name-brand film and television talent, they might want to consider the plight of basic cable’s Oprah Winfrey Network. According to a rather damning report from research company SNL Kagan, Winfrey’s branded network could end up losing as much as $143 million this year.

Ratings for the channel have been so anemic that even when Winfrey finally put her very bankable face on the network’s schedule in January with new series Oprah’s Next Chapter, the resulting 10 percent ratings uptick didn’t even come close to bringing OWN’s viewership numbers up to the level of respectable.

Then this week, the channel, which launched about a year ago, announced that it was canceling a high-profile talk show built around Rosie O’Donnell, paying $15 million to buy her out of what was a two-year $40 million contract and laying off 30 staffers in the process.

Now, Kagan reports, Discovery Communications (NSDQ: DISCA) — which jointly launched OWN with Winfrey’s Harpo Productions and has bankrolled most of the cost so far — is about to take a big first-quarter write-down and is getting restless. Discovery executives haven’t publicly given any indication that they’re about to abandon their investment in OWN, but SNL Kagan predicts the cable media giant will soon approach Harpo about shouldering more of the channel’s cost going forward. The research company estimates that OWN lost about $107 million on a cash flow basis in 2011.

Meanwhile, more trouble is ahead, with the channel facing the expiration of a number of carriage agreements on major cable, satellite and telco TV services. Discover had hoped to secure per-subscriber rates of 20-25 cents from these carriers — rates that are hardly high among ad-supported cable networks. But given OWN’s current inability to find traction with viewers, SNL Kagan believes that even bar may be too high.

So why can’t Winfrey translate her huge success in daytime syndication over two decades into basic cable hits? The consensus among TV program analysts we’ve spoken to is that Harpo, while adept at daytime talk shows, may not be as well equipped to program an entire 24 hour network aspirationally themed shows.

  1. errr, aren’t you comparing “y-apples” to “own-anges”?

    far as i understood, yahoo’s stuff was to be totally online and oprah’s was via cable.

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    1. Daniel Frankel Thursday, March 22, 2012

      Yes, they’re very different businesses. The point in tying the two together was to say that branding by a high-profile media figure isn’t enough to guarantee success for a video programming channel, whether it’s online or on cable. You will have apples with your oranges and like them.

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      1. da-a-a-ng!

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    2.  But it’s possible to conceive that one would have a substitutional effect on the other, right?

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  2. Let’s see … where can I watch OWN? Oh, I have to pay for some other cable channels?

    No thank you.

    Cancelled Rosie? Aw-w-w. Bu-bye.

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  3. Maybe I don’t understand US cable, I’m certainly still at a lost as to Oprah’s popularity. Not that I take issue with the woman, but I’ve never seen a person franchised like her. I’m not sure why you’d ever brand an entire network with a person. Was it really believed people would engage with the network just because it was OW fronted?

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  4. ChuckSacramento Friday, March 23, 2012

    OWN was pretty much doomed from the start.  Giving the big finger to roughly half your fans (joining the political establishment) isn’t a great way to retain your fan base.

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  5. Yes, sometimes you have to take a chance and go after new talent to create some new and interesting.  Why not?  

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  6. Why is OWN failing?  It’s programming is awful.  The Discovery should have seen this coming.  I agree with Judy about taking a chance and going after new talent.  But Oprah, Rosie and Phil are old and over, especially the first two.  This is a perfect lesson in “just because you can, doesn’t mean you should.”

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  7. MediaInsyder Friday, March 23, 2012

    An hour a day of Oprah and her liberal agenda, liberal guests, liberal friends was tolerable, but 24 hours a day? Not even close!! FAIL.

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