CBS is about to learn that what Oprah giveth, Oprah taketh away.
For years CBS, which owns the syndication rights to her show, has been able to count on the queen of daytime television to fill more than just her afternoon slot.
In addition to bringing the company hundreds of millions in revenue, Oprah Winfrey has provided a powerful boost to CBS’ TV syndication arm, establishing leverage with advertisers and creating a number of successful spinoffs.
While Oprah’s company, Harpo, owns her show, CBS is the sole distributor. In exchange for a distribution fee, CBS strikes lucrative licensing deals with local stations to carry her show and sells several minutes of commercial time to advertisers in each episode.
Beyond just CBS, ad buyers said Oprah’s popularity and prime timeslot help drive the overall market for syndicated ad sales, pulling in advertisers who wouldn’t otherwise jump into talk shows, game shows and similar fare.
“She has a halo effect on the entire syndication industry,” said Jason Kanefsky, senior vice president of national broadcast at ad-buying firm MPG. “It helps the overall syndication business.”
Her “halo effect” also acts as leverage for CBS, which has used her program as a bargaining chip to get advertisers to buy time on its other syndicated shows, including “Jeopardy” “Entertainment Tonight” and “The Doctors.”
“When you’re selling Oprah and advertisers want to buy it, that equals leverage for CBS,” said Bill Hague, senior vice president at Frank N. Magid Associates, a research and consulting company in local media.
Her star power has pumped up CBS’ syndication business in other ways. Rather than launch shows cold, CBS has been able to count on Oprah’s keen eye for talent.
The faces of some of CBS’ biggest shows started out as regular guests on Oprah, including Rachael Ray and Phil McGraw. The syndication rights for her most recent spin-off, “Dr. Oz,” went to Sony, which was seen as a loss for CBS.
CBS may be looking for the next talk show superstar to succeed her, but it will be tough.
Ad buyers believe CBS will try to sell “Dr. Phil” to local stations in Oprah’s slot, but they say there is no way he will command the same staggering licensing fees. CBS will also have to do battle with rivals such as Sony for Oprah’s coveted time slot.
The loss of Winfrey is expected to deal a significant blow to CBS’ bottom line, but the company isn’t breaking out any figures.
In most cases, the distribution fee is a certain percentage of the proceeds — typically around 30 percent or 35 percent — that the program generates.
With each renewal of the syndication deal, analysts believe that Oprah’s team successfully chipped away at CBS’ distribution fee. Still, they believe her contribution is sizable.
“They don’t break out Oprah Winfrey,” said Joseph Bonner, a media analyst at Argus Research. “You have to figure it is significant.”