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Oprah is finally showing them the money

01 August 2013, 11:28

Los Angeles - The Oprah Winfrey Network is making money four years after its debut, as stronger ratings and advertising growth helped turn around the joint venture with Discovery Communications Inc sooner than expected.

The news was a bright spot for Discovery, which has invested more than $500 million in OWN, as it posted weaker-than-expected second-quarter results and cut its earnings forecast on Tuesday.

The media company’s stock fell 4,3% to $80,74 on Nasdaq at mid-afternoon.

Discovery Chief Executive David Zaslav said OWN, which it formed with talk-show host Oprah Winfrey, benefited from two popular new series by producer Tyler Perry, The Have and Have Nots and Love Thy Neighbor.

“OWN is now cash flow positive and starting to pay down the investment Discovery has made in the venture,” Zaslav said.

The network, which replaced Discovery’s Health channel in January 2011, had expected cash flow to break even in the second half of the year.

Everyone is happy now

Lazard Capital Markets Barton Crockett said it was encouraging that one of Discovery’s biggest bets was paying off.

 “We knew that OWN was working because ratings have been great. The fact that it is bouncing back into positive isn’t a huge surprise,” he said.

Winfrey, known as the “queen of talk,” had admitted in a TV interview to making “101 mistakes” when launching the network.

The mix of in-depth interviews with celebrities and feel-good programs did not initially translate to the ratings success Winfrey had seen on broadcast TV for years.

Business jargon starts here

Under President Erik Logan, OWN has since gone through layoffs, executive departures and a reshuffling of its programming line-up to add more scripted shows. It also has been selling some of Oprah’s talk shows overseas, including to the United Kingdom.

On Tuesday, Zaslav said it had signed on 30 new ad partners and had the “highest growth of any cable network in the second quarter.” Viewership by OWN’s target demographic of the 25-54 age group grew 39% in the second quarter, the company said.  


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