The Real Digital Drama Behind Oprah's Move from Broadcast TV

There is intriguing digital drama behind Oprah’s teary-eyed announcement that she is ending her popular daytime talk show in two years.

The real reason Oprah Winfrey is jumping from broadcast to cable TV are  profound changes in consumer behavior and digital interactive technology which she will likely put to good use in her next media gig.

In the quarter century that Oprah has become the queen of daytime talk, the video world has changed around her. Cable has increased its viewing audience to match that of broadcast television’s declining viewer base. Cable also has become the more economically viable television option supported by subscription fees as well as advertising.

Local broadcast TV stations which comprise Oprah’s distribution base are crumbling beneath plummeting ratings and revenues. They are suffering from the shift of viewers and advertisers to cable and streaming video online on the Internet and mobile devices. The loss of Oprah’s weekday talk show as a lead-in to late-afternoon local news in many markets will exacerbate the deterioration. Major market network-owned stations each pay at least $225,000 per week in licensing fees for the talk show. CBS Television Distribution will be out an estimated $50 million in annual revenues it receives from distributing Oprah, according to JP Morgan.

Winfrey is responding to broadcast television’s changing dynamics as they are reflected in her own talk show economics.  Financially stressed local TV station owners are having difficulty paying top dollar for the talk show, whose ratings also are under pressure due to the general decline in broadcast TV viewing and the aging of Oprah’s viewing demographics.

Oprah’s decision to jump ship may, in fact, push broadcasters closer to making long-overdue changes. The Big 4 broadcast networks (NBC, ABC, Fox and CBS) and their TV station affiliates are in an economic fight for survival.

NBCU has become the poster child for the dramatic shift in television that even Oprah is responding to: its peacock network is fourth in the prime time ratings and a drag on NBCU earnings, 65 percent of which are generated by its thriving cable networks.

Whether or not the much anticipated merger between NBC Universal and Comcast materializes, the NBCTV network eventually could see its news, entertainment, sports and other components redistributed among new or existing NBCU cable networks (including USA, MSNBC and CNBC). As the new majority owner of NBCU along with existing co-owner General Electric, Comcast also could seek to sell the 10 NBC-owned TV station to a major affiliated broadcast group such as Hearst, Gannett or Belo.

By the time Oprah ends her daytime syndicated talk show in September 2011, cable will be television’s dominant platform access on many mobile interactive devices including smart phones.

Winfrey laid the groundwork for ending weekday talk show last year when she signed on with Discovery Communications to create her own Oprah Winfrey Network (OWN) for cable. OWN is expected to replace Discovery Health Channel in 2010, and Winfrey is expected to contribute to some of the programs that will be featured there. She already is moving seasoned staffers from her talk show and from her Harpo Productions to the new cable venture.

I’m guessing that in two years, Oprah could put her grassroots popularity and digital tech savvy to work by being the first to integrate interactivity into her programs in a big way. Imagine three-way virtual communications with Oprah, her celebrity guests and her doting audience. She could conduct regular community think-tanks on timely and sensitive topics. Her favorite products give-away at Christmastime could become a virtual e-commerce bonanza.

Thanks to the magic of digital media, Oprah’s best, most exciting days could be ahead of her.