Analysis: Oprah's Exit Leaves Stations, Syndicators with Big Choices
With money, time slots freeing up, newscasts and 'Oprah' spin-offs among likely heirs apparent.
By Paige Albiniak -- Broadcasting & Cable, 11/19/2009 11:28:08 PM
What has long been rumored is now official: The Oprah Winfrey Show will depart daytime broadcast television come Sept. 9, 2011, which now leaves syndicators and stations with several options to pursue.
According to many sources, executives at the ABC stations that serve as Oprah's key station group have long said they will fill the time slots by expanding their local news. The ABC stations remain strong--even in today's tough environment--and are news leaders.
The fact is, Oprah is extremely expensive--WABC pays $270,000 per week in license fees for the show; KABC pays around $240,000 per week and WLS Chicago pays about $225,000 per week, according to station sources. If ABC replaced the show with news, it could easily produce newscasts for much less than what it's paying for Oprah. Even if the ABC stations' ratings dropped in the Oprah time slots, the cost savings would likely make up for those declines.
In the past year, the entire industry has recognized that CBS Television Distribution (CTD), Oprah's distributor, would not be able to renew its contracts with stations at such high prices. Over the past five years, the show's ratings have fallen 35% in households and 43% among adults 18-49. That's in line with how much other talk shows (and daytime television in general) have declined, but lower ratings makes it incredibly difficult for already economically challenged stations to swallow such huge license fees.
"Television stations have made it crystal clear to CBS that the show was going to get an enormous haircut if it comes back," says one syndicator. "Why would she want to subject herself to that when she's in such an iconic position and has a piece of OWN?"
If ABC does not decide to replace Oprah with local news, syndicators will be falling over themselves to win those time slots, which are some of the best in daytime and won't have been open for 25 years. Moreover, ABC only accounts for ten markets. There are still 200 other TV stations that will need to replace Oprah.
What stations will replace the show with is the question. Not all stations have the strong news position of the ABC stations, and offering more local news won't make sense for them. Moreover, too much news in a market can mean too much advertising inventory in news, reducing the value of that news inventory for all players.
Stations also are much weaker financially than they were in Oprah's heyday, so whatever syndicated show gets the slots shouldn't expect to earn Oprah money.
Opening for ‘Oz'
Syndicators have been preparing for the day that Oprah goes off the air for years, but fragmentation has made developing the next big daytime hit tougher than ever. Winfrey's own production company, Harpo, is one of syndication's most successful developers of syndicated shows. This year's Dr. Oz, an Oprah spin-off, is the closest thing syndication has seen to a first-run hit since 2002's Dr. Phil, another Oprah spin-off. Sony's Dr. Oz now ties Disney-ABC's Live with Regis and Kelly as the third-highest-ranked talk show at a 2.7 live-plus-same-day household rating, according to Nielsen, third only to Oprah and Phil.
Dr. Oz has not been renewed for a second season yet, and industry observers say that's because Sony has been waiting to see what Winfrey would do. Now that Oprah is departing, the company can go to work upgrading Oz and seeking higher license fees. Oz got its start on the Fox stations in top markets, but the Fox stations are typically unwilling to pay top dollar for syndicated fare. If other stations in those markets step up, Fox might let Oz go, even though the show's ratings are strong.
Winfrey's announcement also explains the timing of Harpo's latest talker starring interior designer and Winfrey favorite Nate Berkus, who has been in development on a show off-and-on since 2004. Sony just announced it would be selling the show for next fall, surprising stations who thought the show was on hold until 2011. But putting the show on the air next fall gives it a bit of time to incubate.
Another potential heir to the Oprah throne is Warner Bros.' Ellen DeGeneres, which airs on NBC stations in top markets. Even if the show stays put on those stations, the popular Ellen will likely benefit from less competition.
And CTD's Dr. Phil, which was just renewed out through 2014, also stands to benefit from less Oprah. While Dr. Phil does not compete head to head with Oprah because of contract requirements, Phil could inherit the title of daytime's top talker if the show's ratings stabilize.
In the meantime, syndicators have about a year to do battle over the Oprah time slots. Stations tend to make deals for new fall shows during the prior winter.
Interestingly, if Winfrey chooses to do some version of her talk show on her new cable network, OWN, she could become her spin-offs' biggest competitor.
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