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A Network of Her OWN

1/18/2008 7:00 PM Eastern

Oprah Winfrey has set her sights on becoming the queen of cable, with an assist from Discovery Communications.

Discovery will hand over the keys to its 70 million subscriber Discovery Health Channel to the multibillionaire and popular talk-show host, who will have full editorial control over the programming, branding and creative vision of the OWN: The Oprah Winfrey Network, a joint ownership venture between Discovery and Winfrey's Harpo Inc., set to debut in 2009.

The deal also includes Winfrey's Oprah.com Web site, which generates 3.0 million unique views a month.

The Winfrey coup is a big cherry on top of the brand-building pie that Discovery Communications CEO David Zaslav has been baking since taking over the reigns of the company a year ago and continues his strategy to build greater value in the network's channels.

“This is a perfect fit for our core values in the company and our brand — we're about quality and original content that satisfies curiosity and enhances people's knowledge about the world,” Zaslav said. “Oprah's brand — and there's probably no bigger brand in the media space — is about quality original content that inspires people to live their best life.”

Certainly Discovery expects that Winfrey and her multimedia empire will improve the viewership fortunes of Discovery Health, which offers health and wellness content such as The National Body Challenge.

Cross-Promotion

While the network's 0.3 primetime household rating was flat in 2007, the network experienced a 5% drop in overall viewers from 184,000 in 2006 to 174,000 last year.

Given Winfrey's strong and powerful brand, which also successfully touches publishing (O: The Oprah Magazine), satellite radio (XM Radio's Oprah and Friends Channel) and movie production (The Great Debaters), OWN will certainly have strong appeal both to viewers and to the advertising community, according to Katz Television Group director of programming Bill Carroll.

“Anything that has to do with Oprah, advertisers look at in a positive way; her endorsement of something is more powerful than the Good Housekeeping seal,” said Carroll. “For Discovery, they get to take an underperforming channel and give it the potential of being a primary player for them.”

The network has “unbelievable cross-promotional opportunities,” Carroll noted, through the Oprah.com Web site, Winfrey's syndicated broadcast television show and her XM Satellite Radio program.

Indeed, Pali Research analyst Richard Greenfield in a recent report estimated that Discovery's half share of OWN will be worth significantly more than 100% of Discovery Health's current value, particularly if Winfrey is able to shift her syndicated television show to OWN when her contract with CBS Corp.'s King World Productions ends in 2011.

Show Could Migrate

Winfrey, in a conference call last week with reporters, hinted that the show could migrate to the channel, but would not reveal content planned for the lifestyles and entertainment channel.

But Zaslav is confident given Winfrey's track record that she'll put together very viable and strong content for the network.

“There's no one better than Oprah and spotting talent and developing talent,” said Zaslav, who approached Winfrey early last year about creating the network. “That's a big strength that we're going to lean on.”

Winfrey said her creative and ownership involvement in OWN is a far cry from when she was one of the initial investors in February 1999 in Oxygen Media, when the venture was trying to raise $450 million to establish the cable channel and related Web sites.

Winfrey said she was not a creative participant in the development of that channel, aimed at women. Oxygen was eventually sold to NBC Universal this past December, for $925 million.

“I was an investor in Oxygen and I have to say the channel did not reflect my voice, and I was not a participant in the development of the channel and that's why shortly after the deal and after a couple of board meetings I took myself off the board,” she said. “This is very different. I am the chairman, I will be choosing the CEO … and I'll be involved in every single element of programming.”

Oxygen founder Geraldine Laybourne could not be reached for reaction to Winfrey's comments.

Health of executives

Zaslav said the announcement has been met with “positive” reaction from cable operators who he says are excited about the channel and the opportunity to bring the Winfrey brand to cable.

“It will be in the sweet spot of exactly what this channel is supposed to be doing — living a more productive, healthy life — but we'll have Oprah and the energy she brings,” he said. “It's a big win for this niche.”

The Winfrey deal leaves cloudy the long-term future of executives at Discovery Health, headed by Carole Tomko, executive vice president and general manager of Discovery Health Media, which also includes FitTV. As for now, Discovery executives say it is business as usual at the network for the next 18 months prior to OWN's launch.

Discovery Health is the third of Discovery's networks to receive a facelift under Zaslav's regime. Discovery's documentary-based Discovery Times Channel this month added more investigative and forensic content to its lineup under its new moniker, Investigation Discovery, while Planet Green — formerly Discovery Home — hopes to capitalize on the environmentally-friendly movement when it launches later this year.

Zaslav is also looking to boost the value of The Science Channel and is actively seeking a high-profile cable executive to run its operations.

With 80% or more of Discovery's cash flow generated by its core Discovery and TLC networks, Pali's Greenfield said the re-branding of its digital networks “presents a significant value creation opportunity for … Zaslav and the management team.”

Certainly adding Winfrey's brand to Discovery's portfolio is a good start.

 

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