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This memo is presented by State Farm.
When you start a new business, your first reaction might be to say things like “Woohoo!” or “Yessss! or “boo-yah!” But one thing to say that could be a huge help is:
Like a good neighbor, State Farm is there.
And just like that, State Farm will be there with the coverage that fits your needs, whether your business is growing, or just opened its doors.
State Farm agents are small business owners too, so they know what it takes. They can help you create an insurance plan that fits your small business needs and budget. With State Farm, you can worry less about the unexpected and focus more on your business. With a State Farm agent you know someone is helping you achieve your goals.
Just say…Like a good neighbor, State Farm is there.
The deal that changed the game for Oprah
Today’s episode and memo is about Oprah Winfrey. Zack O’Malley Greenburg and I made the case that she’s the original influencer in our latest episode in our One of Ones series. You can listen to the episode here, read Zack’s piece here, and read below for a few highlights.
I have to credit both Founders and Acquired for highlighting the backstory and mechanics of this deal. You should listen to the first four minutes of this excerpt from David Senra reading Oprah’s Forbes 400 article in 1995. Here are a few highlights:
“In 1984, Oprah was riding high. She was already Chicago’s most popular TV talk show personality. And the local ABC affiliate that produced her show was paying her $230,000 a year. Her agent had negotiated a four-year contract with annual salary increases of $30,000 a year. She was pleased at first but then began having second thoughts.
’Three separate ABC people stopped me to tell me what a great guy my agent was,’ Oprah said. ‘And that didn’t make sense to me.’
Oprah’s natural skepticism was aroused, and she fired her agent. She replaced him with a Chicago lawyer named Jeffrey Jacobs. ‘I had heard Jeff is a piranha,’ Oprah said. ‘I like that. Piranha is good.’
Oprah’s previous agent had given the local ABC station the rights to syndicate the Oprah show. But Oprah and Jacobs sensed that they could do better and started looking for ways to retrieve her syndication rights.”
Here’s a 1986 article from The Washington Post describing the deal shortly after the start of her show:
“Winfrey's syndication deal with King World Syndicators and her contract with WLS-TV will earn her more than $ 10 million in 1986. She owns a substantial percentage of her show and will make millions if it is successful. King World's chief executive officer, Stuart Hersch, confidently says that "The Oprah Winfrey Show" will probably make more than $ 25 million in the first year and that "a year from now we will outbill Donahue.”
The show exceeded all expectations, grossing $115 million in its first two seasons and later grossing over a hundred million annually. In 1994, the show took in $196 in revenue against $30 million in costs. Here’s more from Founders:
“Local stations are willing to pay for Oprah because the audience sticks around for the evening news… These stations [in large markets] were paying Oprah $100,000 per week to carry her show. [In 1994] Oprah sold her show to 210 stations… The stations will also give up an additional minute of advertising time. King World and Oprah will share the ad revenues.”
I can’t overstate how much of a game-changer this deal was. Times have changed, so it can’t be followed with similar impact, but there’s a lot to learn from it.
For more on this deal and its impact, listen to our full episode here or read below for more highlights.
The Oprah effect
There are plenty of well-known influencers today. Many of them make hundreds of millions of dollars per year and capture billions of views. But none come close to Winfrey’s influence during The Oprah Winfrey Show’s 25-year run. Here are a few examples of The Oprah Effect:
- - More Millionaires than the lotto: Oprah reminds me of Jay Z’s verse in Drake’s “Pound Cake” where he talks about the people who made millionaires in his orbit. “Dame made millions, Biggs made millions…” Oprah could say the same about Dr. Phil, Suze Orman, Gayle King, Dr. Oz, Rachael Ray, and more.
- - Politics: In 2000, both George W. Bush and Al Gore appeared on her show, which led to a polling boost for Bush before the presidential election. Then in 2006, Oprah told Barack Obama that he should run in the upcoming election. Oprah endorsed and campaigned for him. Researchers say that Obama voter turnout was noticeably higher in areas that had a higher percentage of subscribers to the O Magazine.
- - Book club: Oprah’s recommended book list carried so much weight among authors. From 1996 to 2011, the 70 books that were recommended led to 55 million copies sold of the “Oprah Edition” of the books. The book club was also the center of a decade-long spat between The Corrections author Jonathan Franzen and Winfrey.
- - The promo run: Celine Dion made 27 appearances on The Oprah Winfrey Show, more than any other celebrity. At that point can we attribute the popularity of “My Heart Will Go On” back to Oprah? In 2009, Michael Buble moved up the release date for his album Crazy Love to line up with an appearance on Oprah’s show. The list goes on.
- - Ownership in media: Some of our most popular Trapital breakdowns ever, on Issa Rae, Tyler Perry, or Will and Jada Pinkett Smith, focus on ownership in media. They all look at Oprah’s Harpo Productions, its lucrative syndication deals, and how it inspired their companies.
And that’s just a shortlist. She’s a true one of one. But Oprah’s success also reflected the media landscape during her show’s heyday. It’s a level of influence that’s hard to replicate, even for Oprah herself.
Breaking the habit
Every weekday, from 1986 to 2011, you could turn on your TV at 4 pm on ABC and see Oprah front and center. She created a low-friction habit with her audience. It was so effective that it made the transition to the Oprah Winfrey Network even harder.
Her new network was a 50-50 joint venture with Discovery, which wanted to rebrand its underperforming Discovery Health network into OWN. The network started off with reruns of old Oprah Winfrey Shows and newer types of content, but it didn’t start off with the consistency of new content from Oprah herself.
The network lost $226 million in its first two years. It later reached a profit in 2013 thanks to Oprah’s partnership with Tyler Perry Studios and a regular series of interviews with Oprah herself. Over the years, Discovery has bought increasing stakes in OWN, growing its ownership from 50% to 95% today. Oprah was paid $70 million in 2017 for a 24.5% stake. Oprah still has creative control, but the asset is now nearly solely owned by Discovery.
Oprah’s later deal with Apple TV+ in 2018 was another big splash, which included a book club TV show, The Oprah Conversation, and documentaries, but that deal ended in 2022. The biggest Oprah moments during that time were her CBS interviews with Prince Harry and Megan Markle, and Adele.
Oprah’s post-2011 career may never quite match The Oprah Winfrey Show run, but it's still more successful and lucrative than most. At 70 years old, she’s still making moves. She recently spoke at the 2024 Democratic National Convention and still does specials, like “AI and the Future of Us” with Bill Gates and Sam Altman.
You should listen to the rest of the episode for more on
- Oprah’s influence on weight watchers
- Why Oprah stood out from other daytime talk shows
- our favorite Oprah moments ever
Chartmetric Stat of the Week - the Oprah Effect on Michael Buble
In 2009, when The Oprah Winfrey Show was still on air, Variety wrote about how Michael Buble moved up the release date of his album, Crazy Love, to line up with an appearance on Oprah's show. Crazy Love is on at least 65,500 playlists on Spotify.
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