An article in Bloomberg Business Week notes that Oprah’s new OWN network (set to launch January 1) is asking cable and satellite providers for triple the $0.07/subscriber/month they pay for the Discovery Health network that it replaces, and that some cable and satcos are balking at the price, preferring to wait until their existing deals with Discovery Health expire to renegotiate.
This for the OWN network that is committed to have Oprah herself on air only 70 hours per year. Although I’d expect that to change if OWN ratings struggle, the article notes that Oprah’s prohibited from having her own show on the network until her current syndicated show ends in September, 2011.
It does provide an interesting look at the finances of a tiny cable network, the kind that have the potential to be squeezed as cable and satcos look to cut costs.
The article notes that in the past year Discovery Health generated $18 million in advertising revenue, and that $0.07/sub/month would generate about $64 million annually from subscriber fees (from the estimated 76 million current subscribers). That ratio of subscriber fee income / advertising is likely pretty typical among tiny ad supported cable networks.