Stephen Foley: Oprah always gets her way but is her TV venture all it's cracked up to be?

Saturday 01 January 2011 01:00

US Outlook: Today is Oprah's big day. After 25 years hosting the daytime talk show that made her the most influential woman in showbusiness and the US's first black billionaire, Oprah Winfrey launches her own TV channel.

OWN (the Oprah Winfrey Network) will extend the presenter's brand of soft soap and emotional hope to cable TV, with inspirational shows like Finding Sarah, following the Duchess of York, and Why Not? With Shania Twain. Oprah herself will move her TV show from free-to-air television to cable later this year.

There has been a lot of snark about the launch of the channel, and doubt that she will pull this off. Shares in Discovery Communications, her 50-50 partner in OWN, have languished amid investor scepticism. But I would wager on her winning. Oprah's business acumen is legendary, she has product placement chops, contacts all over the entertainment industry, and she has taken a hands-on role in arguments over how much the cable companies must pay to carry the channel.

This is the key to OWN's success, and the reason cable channels have been among the most valuable properties in US media in recent years. Rather than just relying on advertising, as free-to-air networks traditionally have, cable channels make a steady stream of income from carriage fees. Oprah calculates that cable companies will pay up to make sure OWN is part of the bundle of channels they offer their subscribers. She is offering discount deals on carriage fees now, but warned cable firms that they will have to pay more – much more – if viewing figures take off as hoped.

So yes, don't mess with Oprah. However, with the launch of OWN – on the heels of cable provider Comcast's $13.75bn deal to buy NBC Universal, the owner of cable networks including CNBC, Bravo, MSNBC and The Weather Channel – I think we might be at the high-water mark for cable television in the US.

Investors love the certainty of carriage fees at a time when advertising revenues are under threat from declining and fragmenting viewership. But the same pressures will catch up with carriage fees, too. The internet provides lots of entertaining diversions from watching TV, and television shows are increasingly being offered directly on the web (either legally or pirated), which is why there is a growing movement for people to "cut the cord", ie to cancel their cable subscriptions entirely.

Oprah's demographic is not the one that is most likely to cut the cord. She wins. She is, and will remain, the queen of TV. It's just that TV ain't all that hot any more.

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