OWN's next challenge: Getting distributors to pony up big bucks
Having managed to woo Oprah Winfrey away from her lucrative daytime television platform in 2011 after 25 years, Discovery Communications CEO David Zaslav now faces his next big challenge: getting cable and satellite distributors to pay big bucks to carry the Oprah Winfrey Network.
Winfrey's tears had barely dried from her on-air announcement of her departure when industry insiders started speculating about how much Discovery, which is Winfrey's partner on OWN, would try to get for the cable channel.
Winfrey's OWN will take the slot currently held by Discovery Health Channel starting in January 2011. Discovery Health is in around 70 million homes. The cost to carry it is about 13 cents per month, per subscriber, according to SNL Kagan, an industry consulting firm. Others familiar with the channel say the fee is much lower. Regardless, Discovery is going to look for a big bump for OWN, perhaps as much as 50 cents per subscriber.
That is a huge price for an unproven service. It would match the price tag for cable networks such as USA and TBS that are established and would not be far behind the almost $1 per subscriber fee that TNT commands.
Of course, that is just starting off a point and odds are OWN will end with a much lower fee from cable and satellite operators. While no one doubts the power of Winfrey's brand, it's not like she'll be a 24-hour presence on the channel. She will have a show on the network but distributors are going to need more than that before shelling out what they pay for already successful channels. On top of that, Discovery is also going to be knocking on doors trying to boost fees for its new kids channel it is launching with Hasbro.
Discovery's Zaslav is nothing if not a persuasive salesman. He convinced Winfrey to bet on Discovery for her network and prior to that he was able to boost subscriber fees for MSNBC and CNBC when he ran NBC's cable business. But given the current economy and the turmoil that has already led to OWN to be delayed several times, Zaslav might not want to get too aggressive here. If he does decide to go that route, here's a piece of advice: Bring Winfrey with you. We hear she can work a room.
-- Joe Flint
Photo: Discovery Communications CEO David Zaslav. Photo credit: Discovery Communications