Winfrey’s Low-Rated Cable Channel Is Poised to Break Through

Ms. Winfrey conferred with the co-presidents, Erik Logan and Sheri Salata, about booking a trip to Mr. Armstrong’s hometown, Austin, Tex., reserving airtime for Thursday night and announcing the “get” to the press.

What no one said on the call was that this interview — maybe Ms. Winfrey’s biggest since her 1993 sit-down with Michael Jackson — could be a turning point for OWN, which has been low-rated since its birth two years ago.

Another turning point — perhaps even bigger — came this month when OWN started to pocket substantial per-subscriber fees from some of the biggest cable and satellite operators in the country. Some of these deals were done before OWN even premiered. The operators agreed to pay just a penny or two per subscriber a month until January 2013, and then start paying nearly 20 cents a month on average, according to people with direct knowledge of the deals who asked for anonymity because the details were confidential. The fees increase over the span of several years.

Multiply those dimes and quarters across most of the 83 million homes in which OWN is available (but not all — at least one deal is still pending) and the value for Ms. Winfrey and Discovery Communications is plain. Discovery, OWN’s other owner, has said that the channel will turn a profit for the first time in the second half of 2013. Discovery has invested more than $400 million to date.

Paul Maxwell, who runs MediaBiz, a television industry reporting and consulting firm, said OWN was now where Discovery hoped it would be at birth. “They’re not satisfied. They see a lot more to do,” he said. “But they think they’re on the right track now.”

The OWN story is a reminder that cable is a niche business, one built on serving loyal but often small groups of fans.

Ms. Winfrey remains just as well-known now as she was three years ago, her last full year hosting “The Oprah Winfrey Show” on local television stations, said Henry Schafer of Marketing Evaluations, a research firm that publishes proprietary Q Scores for celebrities. But her emotional connection to consumers is not nearly as strong as it was then.

Her Q Score — a combination of both traits — dipped to 22 in 2012 from 31 in 2010 among adult women. Although Ms. Winfrey remains above the average of 16, “she’s been out of focus for a while,” Mr. Schafer said.

Big scoops like the sit-down with Mr. Armstrong can bring her back, at least temporarily. OWN is trying to capitalize on the interview by spreading it out over two nights, by raising advertising rates and by running some ads for other programs on the channel. To make sure people can find the interview in the first place, OWN is running Internet and print ads and promoting a channel finder tool.

“When Oprah does what you know she’s going to do — get the big gets — it just provides a big spotlight on all the good that’s been going on,” said Mr. Logan, who cited two successful reality shows, “Welcome to Sweetie Pie’s” and “Iyanla: Fix My Life,” and an Emmy Award for Ms. Winfrey’s “Super Soul Sunday.”

Success for OWN is relative. Last year, only 325,000 people watched the channel on a typical night, 160,000 of whom were 25 to 54 years old. About 50 broadcasters and cable channels had a bigger audience. But OWN was up about 30 percent over its first year, 2011.

Publicly, the low point for the channel seemed to come in March 2012, when the channel decided to lay off 30 employees, about 20 percent of its work force. The layoffs and the cancellation of a daily talk show by Rosie O’Donnell helped the channel to save $50 million a year and achieve profitability more quickly.

Article source: http://www.nytimes.com/2013/01/18/business/media/winfreys-low-rated-cable-channel-is-poised-to-break-through.html?partner=rss&emc=rss