There’s encouraging news for just about everyone except the broadcast networks — and the usual suspects among fading traditional media — in the latest ad forecast out this morning from Zenith Optimedia. The economy “is in a much better place than it was three years ago,” the ad firm says. As a result, overall ad spending growth in the U.S. will accelerate from 3.6% this year to 3.8% in 2013 and then to 4.7% in 2014. But the broadcast networks are headed in the other direction with sales going from -1% in 2012 to -2.5% in 2013 and -3.0% in 2014. The report says that NBC will have a tougher time with the Summer Olympics in London than it had for the Winter Olympics in Vancouver in 2010. With the time difference, “more viewers are expected to tune in online to watch their favourite events rather than wait to watch prerecorded versions.” The shift to cable of college sports including BCS football bowl games and NCAA men’s basketball also has led some advertisers — including pharmaceutical, financial, and consumer products companies — to shift their spending. Those dollars “do not look to be coming back to network TV.” That will contribute to ad growth in cable of 10% this year, then 10.5% and 11% in 2014. ZenithOptimedia still sees pockets of trouble, including at Discovery and Oprah Winfrey’s OWN. The network “has underperformed expectations, and projections of losses for the company are in the region of $330 million…While OWN still has time to recover, the prospects are looking murkier for the cable network.”
Talk about a lose-lose situation… Recent reports say Arianna Huffington’s job duties over AOL have been greatly downsized, while Oprah Winfrey’s failing OWN remains on life support at Discovery after losing millions. So what do the two women do? Why …
Big Media companies in the Q1 earnings season that wrapped this week reminded me of Garrison Keilor’s description of the kids in Lake Woebegon: Virtually everybody was above average, at least when measured against analysts’ expectations. Media stocks began to trade ahead of the overall market as Q1 reports spread their cheery results. But CEO presentations to analysts left me thinking that companies simply had a good quarter. With just a few exceptions — Dish Network’s Charlie Ergen comes to mind — they seemed as complacent as ever about the need for bold initiatives to reinvigorate their maturing businesses. Movie theaters still aren’t addressing the long-term declines in ticket sales. Studios still don’t know what to do about their evaporating DVD sales. Networks appear flummoxed by the general decline in their ratings. And most pay TV distributors can’t imagine anything besides marketing gimmicks that might enable them to proactively boost subscriptions. In order to beat the Street’s earnings expectations, several companies relied on unsustainable gambits. They cut costs, raised prices, and enjoyed the fruits of conveniently timed licensing deals with digital streaming services including Netflix and Amazon. It sounded like they’re hoping that they can keep coming up with new tricks, and that they’ll be bailed out by continuing growth in the overall economy, which remains vulnerable to shocks including a possible worsening of the European debt crisis.
The money angle is important for the beleaguered joint venture between Discovery and Oprah Winfrey. That’s why the big news from today’s announcement — even if it isn’t in the official release — is that Comcast is going to start paying for OWN beginning in January, as it increases its distribution of the channel to about 17M homes from the current 14M. Comcast hadn’t paid for the channel going back to its pre-2011 incarnation as Discovery Health. Some info about the deal leaked over the weekend. The Comcast arrangement will bring OWN up to about 85M homes. While specific terms are still under wraps, OWN’s recent deals have run about three years, and start at 20 cents per subscriber per month. That’s a vast improvement from the current rate which SNL Kagan estimates at about two cents. The channel’s backers are eager to get its finances in order: The recent cancellation of Rosie O’Donnell’s talk show and lay off of 30 employees could save OWN about $40M. SNL Kagan recently said that OWN could lose $142.9M this year, but Discovery responded that the analysis was “riddled with inaccuracies and bad information.”
Here’s today’s announcement:
The Oprah Winfrey Network has reached a deal with Comcast Corp that will increase the number of Comcast homes where the struggling cable network will be available. The new number is up to about 17 million from the current …
EXCLUSIVE: The struggling OWN: Oprah Winfrey Network has laid off 30 employees or 20% of its workforce today as the network is restructuring its operations in Los Angeles and New York. The responsibilities handled by the eliminated positions will be redistributed among remaining executives as well as employees of OWN’s owners, Discovery Communications and Winfrey’s Harpo Studios. “It is difficult to make tough business decisions that affect people’s lives,” said Oprah Winfrey, OWN’s CEO and chief creative officer, “but the economics of a start-up cable network just don’t work with the cost structure that was in place. As CEO, I have a responsibility to chart the course for long-term success for the network. To wholly achieve that long-term success, this was a necessary next step.”
Departing as part of the layoffs is OWN SVP Production Julie Stern. Additionally, OWN COO John MacDonald went to management a few months ago to let them know he was not planning to renew his contract. He was asked to stay on to help with the transition, which he agreed to and will stay through May. In light of MacDonald’s pending departure, Neal Kirsch, CFO of Discovery’s U.S. networks, will be moving to OWN in the role of chief operating officer and chief financial officer, reporting to OWN presidents Erik Logan and Sheri Salata. In addition, following the recent exit of SVP Business and Legal Affairs Alan Saxe, Tina Perry, VP Business and Legal Affairs, OWN, will now oversee the department and partner with Lee Bartlett, EVP Global Production Management, Business and Legal Affairs, Discovery. Michelle Holt, VP Production, OWN, will oversee production, replacing Stern; and Ian Parmiter, SVP Marketing, Discovery Ad Sales, will oversee integrated marketing for OWN. “We have been on the air for 15 months, and since September we have gained momentum in ratings and viewership,” Logan said. “Restructuring our business will allow us to build a solid foundation for long-term growth.” After a disappointing start, OWN has posted modest ratings gains in the past few months, culminating with the record 3.5 million viewership for Winfrey’s interview with Whitney Houston’s daughter earlier this month. Winfrey officially took the reins of OWN as CEO last summer when Harpo Studios presidents Logan and Salata were named network presidents.
The stations groups that passed on a daytime syndicated talk show Rosie O’Donnell was shopping two years ago are probably having a “we told you so” moment today as O’Donnell’s daytime talk show on OWN: Oprah Winfrey Network got the ax after five low-rated months on the air.
OWN went for broke with the launch of The Rosie Show, whose October premiere, along with that of Oprah’s Lifeclass, were broadcast on five Discovery networks. The struggling and money-losing OWN spent some $10 million to market the two shows, whose debut was touted as an unofficial OWN relaunch. That $10 million went where the previous $250 million+ in investment from Discovery went — down the drain. After an OK start with 500,000 viewers tuning in to the premiere, Rosie quickly lost more than half of that to average under 200,000 viewers for most of its run, while Lifeclass was pretty much DOA. Why did O’Donnell, who had two successful previous daytime talk show stints under her belt, on her own syndicated show and on ABC’s The View, fizzle so quickly?
EXCLUSIVE: The revolving door at OWN: The Oprah Winfrey Network continues. The latest high-level executive to depart the struggling cable network is SVP Business and Legal Affairs Alan Saxe, a well-respected executive who ran OWN’s business affairs department. In light of his departure (he reportedly left to pursue other opportunities), Tina Perry, VP Business and Legal Affairs, will lead the department as interim head. Saxe is the latest in a slew of executive departures at OWN, most recently EVP Production and Development Lisa Erspamer.
Meanwhile, OWN has been in cost-cutting mode after an yearlong struggle to break out in the ratings despite a marquee brand name and massive cash infusion from co-parent Discovery Communications. I hear the network’s executives have been told that the business in its current form is unsustainable and cuts have to be made, especially in the main Los Angeles office. Leading the charge in that area is new Discovery CFO Andy Warren, who has been examining OWN’s books. In one cost-cutting measure, OWN was recently asked to eliminate temp positions. The network has had a lot of essential positions, including assistants, filled by non-full-time employees, something that will now end.
In what has become a tradition for the post-Oscars editions of Jimmy Kimmel Live, the late-night show premiered its latest video spoof tonight, a movie trailer for Movie: The Movie, “the greatest movie ever made”. Featuring a bevy of movie stars, including George Clooney, Tom Hanks and Helen Mirren, and top …
UPDATE, 7:05 AM: CEO David Zaslav refused to put any daylight between himself and Oprah Winfrey as analysts in a conference call this morning asked for more insight into the prospects for their struggling OWN joint venture. Now that Winfrey is running the operation, it has “a team she has confidence in, and I have confidence in,” he said. He sidestepped a question about whether Discovery has the right to terminate its agreement with Winfrey, or to re-purpose the channel — for example by moving it to the Web. “We’re up for about a year,” he says. “If we grow a meaningful audience, and we think we will, this will be a significant asset.” Zaslav says that the channel “learned a great deal about its audience” last year and is “off to a nice start in 2012″ with returning shows including Our America With Lisa Ling and Sweetie Pie. Also, “Oprah will be featured in additional formats. … We’re excited to grow this network in 2012.” The company says that, as a matter of policy, it doesn’t break out profits for individual channels.
In light of the sudden departure of OWN’s EVP of production and development Lisa Erspamer, the struggling cable network, a co-venture between Oprah Winfrey’s Harpo and Discovery Communications, has enlisted the help of 16-year Discovery Communications veteran Rita Mullin. On an interim basis, Mullin, currently SVP of Content Strategy for Discovery Fit & Health, will work with OWN’s team on programming and development while continuing in her role at Discovery Fit & Health. OWN’s programming is being overseen by network president Sheri Salata and Winfrey. Mullin brings to OWN: Oprah Winfrey Network what the network’s brass had been lacking: extensive series and cable network experience. Before joining Discovery Fit & Health, Mullin was head of TLC’s East Coast development team and responsible for developing several of the network’s top-rated series, including Jon & Kate Plus 8, 19 Kids And Counting, The Little Couple, Four Weddings and Sister Wives. This marks a homecoming for Mullin who, before her stint at TLC, served as VP of development for the Discovery Health Channel, which was replaced by OWN.
Rosie O’Donnell’s new daily talk show on OWN: Oprah Winfrey Network is looking to shake off lackluster ratings with a new executive producer and a new set. Shane Farley, who worked with O’Donnell on her previous Emmy-winning syndicated talker The Rosie O’Donnell Show has come on as executive producer. He replaces Page Hurwitz, who as executive producer oversaw The Rosie Show‘s launch and first three months on the air. Farley has more than 15 years of experience producing talk shows, most recently Rachael Ray. The Rosie Show kicked off 2012 with a new smaller and brightly colored set. It fits about 70 audience members, about a fifth of the original set, and is inspired by Rosie’s art studio at her home in New York. The radical downsizing does not allow for a band setup, though OWN said that “musical director Katreese Barnes will continue to be fully engaged behind the scenes, creating original music for the show, including digital shorts and musical parodies.” “Having worked with Shane for a number of years, I knew he’d be a great addition to the team as we continue to develop the vision for the show,” O’Donnell said.