Can Oprah lift OWN's low ratings?

by Patricia Sellers

Will Oprah Winfrey's OWN be a top 10 cable network?

"Technically, I don't think in terms of being in the top 10," Oprah told me in September, before the 1/1/11 launch of her new cable network. "But do I think we will be? Yes."

Fortune's recent cover story, "Oprah's Next Act," detailed her big hopes and just-as-big fears about her new venture. Now it appears that OWN's road to the top 10 will be longer than she anticipated.

Today's New York Times notes OWN's slow start: Its overall ratings have been below those of Discovery Health, whose prime cable real estate (access to 75 million homes) OWN replaced.

The folks at OWN, which is a 50-50 partnership between Oprah and Discovery Communications (DISCA), realize that they underestimated viewer demand for original programming.

The gist of OWN's ratings problem: Even with 11 original programs on air, OWN has too many hours of repeats. If you think of OWN as a store that had a grand opening in January, with customers storming the aisles, now it has too few customers returning. Reason is, there's not enough fresh product on the shelves.

So, what are the OWN execs doing to fix this problem? They've announced 12 more new programs to premiere this year. Watch for OWN to shift marketing money behind the most promising, such as shows starring The Judds, beginning in April, and Rosie O'Donnell, in September.

OWN also plans to air more programming from the Discovery library. Remember What Not to Wear and Say Yes to the Dress? Maybe you do. Well, you'll see them on OWN.

One thing that's helped Our America, a documentary series starring Lisa Ling, is aggressive promotion on The Oprah Winfrey Show, where ratings are strong in its final season. OWN's research shows that fewer than half the viewers of Oprah's daytime show on broadcast TV have sampled OWN. So she would be wise to flog OWN more on that platform.

The biggest challenge will come when Oprah and her broadcast show leave the air this September--and her destiny then lies with OWN. Horizon Media SVP of research Brad Adgate predicts that in order to bolster OWN's rating to advertisers' expectations, Oprah may have to up her OWN on-air presence beyond the 70 hours annually that she has committed to. "She might have to do 100 hours instead of 70," suggests Adgate.

Um, don't count on it. When I interviewed Oprah in September, she agonized about giving OWN 70 hours. "That's my all-in commitment," she told me.

Meanwhile, CEO David Zaslav at Discovery, which has committed $239 million to start and build OWN, says that OWN will be profitable in its first year. This is due to brisk ad sales, including big deals with Procter & Gamble (PG) and General Motors (GM), and improved cable subscription fees. OWN's monthly "sub fees," around 20 cents per cable subscriber, are more than twice Discovery Health's rates.

"Adding Oprah to the mix is a win," says Bill Gorman, co-founder of TV by the Numbers. "Anyone suggesting that OWN might not make it is nuts."