Oprah Soars Into XM’s Orbit
Talk show queen signs $55-million deal with satellite radio service.
February 9, 2006
Move over, Howard Stern. Another megastar is heading into orbit. Oprah Winfrey and friends will get their own channel on XM Satellite Radio under a three-year, $55-million deal announced Thursday.
XM and Harpo Radio, part of Ms. Winfrey’s production company, Harpo Productions, will collaborate on the new channel, which will debut in September.
XM has been competing with its rival Sirius Satellite Radio in an effort to sign up celebrities and exclusive content to entice listeners to subscribe to their services. Last month, Mr. Stern debuted on Sirius as part of a five-year, $500-million deal (see Satellite Radio’s Stern Wager and No Stern Warnings on Sirius).
While the size of Ms. Winfrey’s deal pales in comparison to Mr. Stern’s, the size of the contract might well increase if her channel proves successful.
While the deal with Mr. Stern is bringing a largely male audience to Sirius, the deal with Ms. Winfrey is likely to attract more female subscribers to XM.
“Winfrey is a marquee talent with particular attraction to the female audience, which has under-indexed at this point in subscribing to satellite radio,” wrote research analyst James G. Dix in a research note for Deutsche Bank.
Shares of XM rose $1.74 to $26.35 in recent trading, while shares of Sirius climbed $0.10 to $6.08.
Oprah Entourage
The “Oprah & Friends” channel will feature segments hosted by Ms. Winfrey, as well as personalities who make frequent guest appearances on The Oprah Winfrey Show and O, The Oprah Magazine.
Ms. Winfrey and O Editor Gayle King will host a weekly “reality” radio show from a new XM studio at Harpo Studios in Chicago. The channel will also feature other Oprah friends, including Bob Greene, Dr. Mehmet Oz, Dr. Robin Smith, Marianne Williamson, and Nate Berkus.
“Together with my friends, we look forward to creating programming that will entertain, inform, and inspire our listening audience on XM,” said Ms. Winfrey.
She is unlikely to give a show to James Frey, the author of her book club selection A Million Little Pieces, whom she excoriated on her show last month after events related in his memoirs were exposed as false by TheSmokingGun.com.
There also will be no show from frequent Oprah guest Dr. Phil McGraw, according to Nathaniel Brown, senior vice president of corporate communications at XM satellite Radio.
The programming on the new channel will cover topics such as nutrition, fitness, health, self-improvement, home, and current events.
It will complement Ms. Winfrey’s daily TV talk show, as well as the content in her magazines and her cable TV network, Oxygen.
“‘Oprah & Friends’ will not only complement our existing television, print, film, cable, and online properties, but will provide new opportunities to extend our brand to XM’s millions of listeners,” said Tim Bennett, president of Harpo Productions.
The topics covered on the channel will reflect the areas of expertise for which the hosts are known, according to Mr. Brown. XM will pay Ms. Winfrey’s company roughly $18 million per year for the shows.
Beating Sirius
XM, based in Washington, D.C., now has more than 6 million subscribers and expects to have more than 9 million by the end of the year, putting it well ahead of Sirius, which had 3.3 million at the end of last year. XM also projects to reach a cash flow breakeven point by the end of this year.
“We feel really good about our leadership position,” said Mr. Brown. “We’ve got a three-prong content strategy. We’ve established our leadership in music, sports, and with Oprah, we’ve established our leadership in lifestyle and talk programming.”
In the talk category, XM also has Ellen DeGeneres as a host, as well as Bob Edwards and a radio version of Good Morning America. In the sports area, the company is carrying the PGA golf tour, World Cup Soccer, Major League Baseball, and Nascar racing.
In music, XM has a show from Bob Dylan that will begin in the spring. XM’s music team also features Snoop Dogg, Tom Petty, and Ludacris as show hosts.
Mr. Dix of Deutsche Bank believes that XM’s market share leadership, programming, and promotion partnerships with America Online and Starbucks helped attract her to XM.
XM also has technology that enables it to easily add channels without displacing existing channels. “While there is limited bandwidth, because of our technology we are able to add channels,” said Mr. Brown. “Because the technology gets better, we can do more with the bandwidth we have.”
Ms. Winfrey will announce the XM channel on her show on Friday. Mr. Brown did not know if Ms. Winfrey—who gave cars to audience members last year—would be giving away any free XM radios, but it’s a good bet that she will.
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