Measuring the 'Oprah Effect' on the Bottom Line

Nov. 20, 2009 — -- Oprah Winfrey's plans to end her popular afternoon talk show in 2011 have left her many fans devastated. But executives in industries ranging from publishing to television to mom-and-pop stationery stores are also feeling a bit teary-eyed -- because, aside from being a TV mega-celebrity, Oprah Winfrey has been a big moneymaker for a lot of people.

"It definitely has a huge impact. I don't think stations will be closing up business, but there is concern," said Marc Berman, a television analyst with Mediaweek. The impact will primarily be felt at ABC, because the syndicated talk show aired predominantly on local ABC stations across the country.

Last week the program averaged 6.5 million viewers, making it the No. 1 daytime television talk show. Many viewers tended to stick around to watch the local news on the ABC stations on which Oprah aired. That meant bigger audiences for the news shows, which meant more revenue from ad sales.

"It was a tremendous moneymaker, and one of their primary sources of income," said Berman.

Still, carrying "The Oprah Winfrey Show" was not without its downside for local television affiliates. Oprah's distributor, CBS Television Distribution, charged high licensing fees for the show. According to Broadcasting and Cable, an industry magazine, WABC-TV in New York paid $270,000 per week to carry the show and WLS-TV in Chicago paid about $225,000 per week.

That's a lot of money for struggling local stations to shell out. In addition, the audience for the "The Oprah Winfrey Show," while still large, had dropped by about half over the past 10 years from a peak of about 11 million viewers.

As to what happens now, it's anyone's guess, although Dr. Mehmet Oz, an Oprah alum, has been doing very well and now ties "Live With Regis and Kelly" as the third–highest-rated daytime talk show.

Publishing World Reeling at Loss of Book Club

If the post-Oprah television landscape is in a state of flux, the publishing industry is positively reeling at the thought that Oprah's Book Club may not survive the talk show's demise.

In 1996, the book club started as a small feature on "The Oprah Winfrey Show." Constance Sayre was a publishing executive at the time.

Oprah's Goodbye: Who Stands to Lose

"I remember the first book. Nobody knew what to make of it, and I think they sold 750,000 copies, and everybody in publishing positively stuttered," said Sayre.

Sayre, now at Market Partners International, a book-publishing consulting firm, said it's hard to overestimate the impact of the "Oprah Effect" on the bottom line. "It means a lot no matter who you are, whether you are Random House or someone much smaller. … If you took those sales away, some of the publishers may not make any profit," said Sayre.

Sales of one of the book club selections would routinely hit the hundreds of thousands and the books themselves shot up a variety of best seller lists. "This is going to make a lot of people unhappy," said Sayre.

Music Industry: Black Eyed Peas and Whitney Houston

There will be unhappy people in the music industry too. According to Keith Caulfield, a senior chart manager at Billboard magazine, when the Black Eyed Peas performed on "The Oprah Winfrey Show's" season opener this year, its album sales jumped 29 percent. And when Whitney Houston gave a two-part interview to Oprah, her album sales shot up 77 percent.

"We don't see the kind of sales impact Oprah has on other shows like the 'Today' show or Ellen DeGeneres," said Caulfield. "Oprah is an anomaly."

And Oprah's Midas touch affected business both large and small. Felix Doolittle, based in Newton, Mass., is a small stationery company. Co-owner Loren Sklar remembers the day the company heard that Oprah Winfrey had picked Felix Doolittle as her all-time favorite stationery. "When we were picked, it's hard to describe, you really do feel plucked out of the great masses and you have this light shine on you. It's something everyone in business dreams of," said Sklar.

Sklar said the imprimatur of an Oprah pick is unlike anything else, because Oprah's fans are so loyal. Felix Doolittle was first named to one of O magazine's gift lists more than a year ago. That selection translated immediately into sales and became a marketing tool the company could use on its Web site and Facebook page. "Felix Doolittle makes my all time favorite stationery" are the words that greet you now at FelixDoolittle.com.

At the taping of her show today in Chicago, Oprah addressed her loyal viewers and confirmed their worst fears that she had decided to end her successful talk show. "Twenty-five years feels right in my bones, and it feels right in my spirit. It's the perfect number -- the exact right time."

Of course, what feels right for Oprah Winfrey feels very wrong for many companies across the country.