Oprah’s OWN Ready to Make Cable Sell

Execs in cable field say pitch between 10-15 cents; other estimates as high as 40-50 per sub

On the heels of Oprah Winfrey's announcement Nov. 20 that
she will end her syndicated talk show in 2011, distribution executives at OWN:
The Oprah Winfrey Network are losing no time in getting out and selling the
forthcoming empowerment-oriented service to the cable systems operators. And
Lady O is going to come with a price.

The new channel is attempting to use the media buzz around
Oprah's announcement to generate excitement around the service, which will
launch officially in January 2011, three years after the concept was first

According to several executives in the cable distribution
field, the channel is pitching itself at between 10 cents to 15 cents a
subscriber. Other executives familiar with the discussions say the channel is
being pitched for 40 to 50 cents per sub. Discovery Communications declined
comment.  That's relatively high for a new channel, say cable experts, but
it's warranted given Oprah's draw. One highly placed cable industry executive
observed, "Honestly, would you want to be the MSO that takes a hard stance on
fees and keeps Oprah unavailable in your geography after it launched? That is
an invitation for churn."

The industry average for per-household-subscriber fees paid
to channel operators is between 20 cents and 25 cents, though that figure
includes the costly sports service ESPN.

What About the Programming?

One distribution executive observed, however, that cable
operators want more precision on what kind of programming will air on the

"‘Reflecting her values'-what does that mean?" asked one
executive. "Will the programming go beyond Oprah? Will people be willing to
watch a documentary on schools in Africa that
might be much longer than a segment on her show?"
OWN will replace Discovery Health, which was offered to operators as a free
service since it began life as a digital service. While OWN will finally turn
in some revenue for Discovery Communications and Oprah's Harpo Productions, the
companies still need to honor covenants that mandate what kind of programming
the new channel will carry. Executives familiar with plans say the service will
have plenty of health-themed programming to cover that.

An announcement that will give more detail on programming
plans is expected in the next few days. It appears that OWN will only be able
to program non-scripted series given Winfrey's development deal with Time
Warner's HBO.

Gary Lico, president and CEO of Cable Ready, a program
development and distribution consultancy, said OWN falls into a slightly
different category than other women's networks. "There is a need for this,"
said Lico. "People want life-affirming networks that aren't just religious."

Lime, a cable service that offered such things as yoga and
spirituality programming, failed, however. But Lico added: "We're not talking
about a niche when Oprah's name is on it."

Discovery and OWN issued a statement today, confirming the
launch date of January 2011. In the statement Discovery CEO David Zaslav said:
"We look forward to bringing her and her creative vision, programming and
unique voice to approximately 80 million homes on OWN, as well as online
through the award-winning Oprah.com."

The statement also asserted the service would have 80
million subscribers. Discovery Health is currently in 74 million homes. The
additional six million homes are a projected number based on increases in cable
take-up over the next 12 month period.

Spearheading the channel's distribution is Allan Singer,
executive vice president of distribution and strategy, who's based in Los Angeles. Singer was
previously senior vice president of content acquisition at Comcast Corp. and
was also senior vice president of programming investments at the MSO. His
appointment had some puzzled over why Discovery isn't in charge of distribution
and using its large portfolio of services for leverage.  Discovery has
however drafted two top executives to help the service get off the ground,
advertising chief, Kathy Kayse, who previously sold Discovery's digital assets
and Science Channel general manager, Debbie Myers, who is acting general
manager now at OWN.
Additional reporting by Alex Weprin