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Did you see the I think this was a tweet is it Tom Marillo that has a go off to go to Harvard? Yeah, actually I did Really good so good Welcome to season six episode eight the season finale of acquired the podcast about great technology companies and the stories behind them I'm Ben Gilbert. I'm David Rosenblum and we are your hosts today We are covering an incredible entrepreneur Oprah Winfrey and her company Harpo Studios Oprah is a fixture of American life entering the home of tens of millions of Americans through their television set every day at 4 p.m. for the 25 year run of her show Oprah Winfrey show So great it is but it is the unique story of her business decisions how she created her brand across her show a magazine a cable channel and more how she controlled every detail and grew from TV personality to business mogul that we're going to cover today She is the first black female billionaire and perhaps most relevant to the acquired audience She really invented the idea of what we today call an influencer if you watch a youtuber tick tocker Have ever bought a product that an internet personality recommended or even more abstractly you like thinking about how social platforms are Transforming the consumer economy you really have Oprah to thank for paving the way I don't know if you saw I was watching the David Dobrik YouTube a little bit ago where he and his crew dirt brown Delay and see it and tossed out like you know gifts to it was tossing out like ps4s and cell phones and xboxes and then like to toss Now like 10,000 dollar checks and stuff but it's like yeah, I guess you get a car you get a car you get a car Oh, we will get into it. Oh, yeah, as always if you love acquired and you want more you can become an acquired limited partner Our most recent episode was the first in a mini series that we were calling venture capital fundamentals We kicked off the six part series with a deep dive on sourcing how different firms do it? Why it's important and the different schools of thought around the topic So if you want to join you can get access by clicking the link in the show notes or going to glow.fm Slash acquired and all subscriptions come with a seven day free trial and We have a big announcement about the LP program coming later in the show So we're gonna we put a little box on everybody's chair who's listening? Don't shake it. We're all gonna open it at the same time We do have an announcement in the middle of the show stay tuned the more you learn about Oprah the more that you learn that as a media Personality or a media. I guess that's the right way to phrase it. There's nothing you can do that Oprah hasn't already done Literally nothing. Yep Our presenting sponsor for this episode is not a sponsor But another podcast that we love and want to recommend called the founders podcast We have seen dozens of tweets that say something like my favorite podcast is acquired and founders So we knew there's a natural fit. We know the host of founders well David Senra. Hi David. Hey, Ben. Hey David. Thank you for joining us Thank you for having me. I like how they group us together and then they say it's like the best curriculum for founders and executives It really is we use your show for research a lot I listen to your episode of the story of a key omurita before we did our Sony episodes this incredible primer You know, he's actually a good example of why people listen to founders until acquired because all of history's greatest entrepreneurs investors They had deep historical knowledge about the work that came before them So like the founder of Sony who did he influence Steve jobs talked about him over and over again if you do the research Him, but I think this is one of the reasons why people love both of our shows and there's such good Complementes on acquired we focus on company histories You tell the histories of the individual people you're the people version of acquired and where the company version of founders Listeners the other fun thing to note is David will hit a topic from a bunch of different angles So I just listened to an episode on Edwin land from a biography that David did David It was the third fourth time you've done Polaroid. I've read five biographies of Edwin land And I think I've made eight episodes of them because in my opinion the greatest entrepreneur to ever do it my favorite entrepreneur Personally is Steve jobs and if you go back and listen to like a 20 year old Steve jobs He's talking about Edwin lands my hero So the reason I did that is because I want to find out like I have my heroes who were their heroes and the beauty of this is The people may die, but the ideas never do and so Edwin land had passed away way before The apex of Apple, but Steve was still able to use those ideas and now he's gone and we can use those ideas And so I think what acquired is doing what a founder trying to do as well is find the best ideas in history and push them down their generations Make sure they're not lost history. I love that Well listeners go check out the founders podcast after this episode you can search for it in any podcast player Lots of companies that David covers that we have yet to dive into here on acquired so for more indulgence on companies and founders go check it out All right, David now over to you to take us into the story of Oprah and the company that she founded that's behind it all Harpo studios Well one disclaimer before we get going is anytime we're talking about Oprah There is way too much to cover in one podcast episode little and one podcast little and one show I mean we're talking about a woman who owns her own cable network You know gets presidents elected so we can't cover it all here. We're gonna be covering her origin story and The business behind her but two Fantastic sources if you want more Oprah and who doesn't want more Oprah that you should go check out one is The local Chicago NPR affiliate WBZ did a great podcast a couple years ago The gen white did called making Oprah It's a three-part series with a few bonus episodes definitely go check that out. They interview Oprah They interview Phil Donut you it's great and then the other one is a number years ago Kitty Kelly Rote unauthorized biography of Oprah which is extremely well researched controversial in many ways but also forms a lot of the facts and Basis for this so definitely go read that if you want a long deep picture of Oprah Winfrey or Should I say Orpa Gale Winfrey because that is the child that was born on January 29th 1954 in Casillas go Mississippi Yeah, it wasn't it something like people Mispronounced her name and so she just said ask grew it and changed it when she was younger Yeah, so orpa is a biblical character in the book of Ruth that was Oprah's name But yeah, people is not a common aim a mispronounced it you know read it incorrectly and just started calling her Oprah or opi when she was young and It's stuck. Wow Yeah, how history could have been different indeed indeed. What would have happened otherwise? So everybody knows Oprah right and some people may have a sense of her story that Got her to become Oprah that we know her today But I think a lot of people don't I didn't before researching this and this is just like You know, this is up there with Andy Grove story of just such an incredible Incredible triad boa ver adversity to entrepreneurial success so When Oprah was born in 1954 in Mississippi in the deep south she was born to a single teenage mother for needily who was a housemaid Her mother and the family believed that Oprah's father orpa's father was a man named Vernon Winfrey and he believed that too It's actually extremely unlikely that biologically he was her father because he was on active military duty nine months before Oprah was born, but it is definitely true that he Wasn't and is a father to her and every other sense of the word so after giving birth Vernita actually left Mississippi when orpa was very very young orpa who already then had been started people were starting to call her Oprah was raised by her grandmother until she was six years old her grandmother taught her to read and Started taking her to church and even like at like two three years old Oprah was like already You know she loved the stage people nicknamed her the preacher at church because she would recite Bible verses for the congregation Even as a tiny little child that would that would go on to become a big theme in her life a little later But then in age six her mother was living Renita was living in Milwaukee, Wisconsin at that point in time had had another daughter a half sister to Oprah named Patricia And she sent back home to Mississippi and said you know, I'm ready to be a mother send a send Oprah And I'm gonna raise these two girls together Patricia very sadly would die from a jug overdose at age 43 So Oprah goes to Milwaukee lives with her mother for a while While she's there for Nina has another daughter who she puts up for adoption that Oprah wouldn't even know about until like Only a couple years ago they were reunited and a son named Jeffrey who would later die in the AIDS epidemic so just Terrible terrible tragedy Befalling this family and we haven't even gotten started yet Oprah Shuttle kind of back and forth from Milwaukee to Nashville where Vernon had moved and Vernon had settled down there and he had married a woman named Zelma Myers and He was working at Vanderbilt University as a janitor. They had been trying to have their own children But we're not able to so loved when Oprah would come to visit and then at age nine So between six and nine she kind of shuffles back and forth between at age nine though She goes to live somewhat more permanently in Milwaukee and that's where she talks about One night she was watching the Ed Sullivan show in on the television in her mother's department and Diana Ross and the Supremes were on and this was like This was a huge moment. I mean, you know the Beatles of course been a bit on Ed Sullivan but like to have a Motown group in African American group of black group and A group of black women on the Ed Sullivan show Sunday night prime time was was a huge moment So Oprah says I stopped wanting to be white when I was 10 years old and I saw Diana Ross and the Supremes Perform on the Ed Sullivan show. These are her words. I was watching television on the Linoleum floor in my mother's apartment I'll never forget it It was the first time I had seen ever seen a colored person wearing diamonds that I knew were real I wanted to be Diana Ross. I had to be Diana Ross us wow It's so interesting how in so many of these stories you can sort of pinpoint a moment in someone's life where It started to click for them where I like a key piece of who they would become You know snapped into place and their motivation you can sort of understand from there. Yeah Hey listeners quick warning that the next segment contains a high level description of trauma and sexual assault that Oprah experienced If you or someone within your shot wants to avoid that you should skip ahead about seven minutes from now. Thanks Unfortunately though, so that was that was you know a great great moment that would become a driving force You know Oprah to this day I'm fortunate right around that same time There was a terrible moment that would also set her down a path that Fortunately she steered back from but she was right around that same time when she was nine years old She was raped in Milwaukee by a 19 year old cousin as you can imagine completely shattering This nine year old to be raped and exposed to everything at that age She started spiraling she started drinking she started running away She started having sex regularly also. She's nine like what does spiraling even mean for it? Yeah, right. I mean it's just I I Heartbreaking Totally totally heartbreaking the family doesn't understand and It's terrible and I think a lot of the family didn't believe her right when she later would Tell people about this that you know it got swept under the rug. Yeah, she's spoken a lot about this and Can't even imagine when she's 14 she This has been going on for five years. She's been molested abused raped by several members of the family at this point and Others she runs away from home in Milwaukee and a Rita Franklin was in town in Milwaukee giving a concert And she sees her in a limo and opera Runs up to her in the limo and starts sweet talking a Rita Ed says you know she's from I think she says She's from Ohio makes up some story needs like bus fare to get home or something at a Rita gives her a hundred dollar bill At Oprah of course that goes and like rents a hotel room for the week and supposedly when verneta finally finds her She calls up Vernon and says I can't I can't deal with this with this girl anymore You need to take her and take her permanently. That's the last time she spends in Milwaukee And this ends up being you know Thanks to a Rita and a Rita will come back later in the story Probably that just the best thing that ever ever happened to Oprah She goes to live with Vernon and Zelma they instill strict discipline and try and straighten her out there require to Go in addition to going to school. She's a sophomore in high school require her to go to the library and write a book report for them every week In addition to her schoolwork Oprah You know kind of chafes under this and you know is Not happy and and she's particularly not happy because She has a she has a secret which is that she is pregnant and she tries to hide it from her family She goes to East Nashville high The first class to integrate the school it had been an all-way school before that class. Oh, I didn't realize that yeah crazy She tries to hide it from everybody. She kind of you know soaks in the back of the classroom And then a couple of months go by and that winter Zelma kind of figures out what's going on and And Oprah's you know getting bigger of course and can no longer hide it so Zelma takes her to the doctor Forces are to come to a doctor's appointment. Of course, you know Confirms that she's pregnant and Oprah says later having to go home and tell my father was the hardest thing I ever did I wanted to kill myself Oh, I can't imagine so through all of this Oprah ends up going into labor two months early. She has a son Baby boy is born in February 1969 Oprah had just turned 15 And because the baby was born So early and then you know that time so Didn't have the care that Premise have today the baby ended up dying a month later in the hospital and So sad so sad and I mean just looking at this six-year span we've covered a lot of people on the show who have overcome adversity Oprah's story is Almost incomparable in the the amount of trauma that she went through in those six years You know, we've said a couple times the phrase you and I both said it. I think I can't even imagine it's so It's so far outside the lived experience That I've had and I'd imagine the same for many of our listeners that it it requires like a different set of words Then I really have for this and in doing the research for this episode It is truly unbelievable and and and just a unbelievable story of character and willpower and Who Oprah is as a human that she was able to become who she became after going through all of this Terrible terrible events. Yeah, and you know The only thing I can story that we've told on the show that I think can even Come somewhat close is is Andy Groves story, you know living through the Holocaust You know, they're just heartbreaking thing about Oprah story here is like This still happens, you know, this happened for so many people and this still happens and Yeah, David you touch on something important there These are manifestations of systemic problems of racism oppression and also a violence against women I mean, it's not just one story about getting a bad luck at the draw here yeah So the pregnancy and the baby and the baby dying was a total family secret Vernon and Zelma knew uh and and Oprah but nobody else knew the family kept it Completely hidden didn't tell anybody until 1990 so many many years later well after Seven years into her show Yeah, you know when I when it came out and Oprah finally talked about it I would this is actually Vernon, you know has a quote. This is in the kitty kelly book. He says uh that that when it happened He he said to Oprah quoting here. This is your second chance We were prepared Zelma and I to take this baby and to let you continue your schooling But God has chosen to take this baby and so I think God is giving you a second chance And if I were you I would use it Whoa, yeah a Tarte Corps that is hardcore heavy stuff um, but that is exactly what Oprah does So she goes back to school. She takes like a week off. We're now in you know late winter of her sophomore year in high school And she just completely completely reinvented herself She says this is a quote from her I went back to school and not a soul new nobody Otherwise, I never would have had this life that I've had so she goes back and she's completely different She tells everybody that she's gonna be a movie star and she's gonna be famous and so uh she marches into Her English teachers class and you know tells her this their English teacher says okay, you know great I'll I'll encourage you and and so she Gives Oprah enters us to tell her to a book of poetry by James Weldon Johnson called gods trombones eight Negro sermons in verse Oprah Loves these this book these poems she starts doing kind of dramatic readings of them in the community and and in churches around the city And she kind of starts becoming a local celebrity like her readings of these you know And again nobody knows her secrets right but like for a 15-year-old like just incredible oration And she has this deep you know Oprah voice already that we all know now and um So she ends up kind of through doing this She gets the chance to travel to Los Angeles and read for other black church groups in In LA and as she's doing she's 15 years old She visits the Hollywood walk of fame and and Vernon says when she when she came back She told Vernon daddy I got down on my knees there and I ran my hand along all those stars on the street and I said to myself one day I'm gonna put my own star among these stars One day I can buy any star I want yeah I can buy the whole walk I get into the encouragement of her English teacher I think she joins what is what is then called the national forensics league at school It's now the national speech and debate association and she starts giving Orations and speeches at you know educational contests locally and then around the state she starts winning these competitions Then she starts competing nationally she's traveling all over the country winning competition she goes to Philadelphia she wins a major competition there She ends up I think the next year maybe I don't know if it's that probably the next year her junior year She gets elected as vice president of the class So the first black class officer remember the high school just integrated the year before and she gets elected most popular in the school and then her senior year in 1971 she gets selected as the White House. This is kind of crazy the the Richard Nixon White House At the time All this thing called the White House conference on children and youth and it took place in Colorado and They selected high schoolers to yeah, so Oprah on the back of this She gets back to Nashville and She ends up participating in the march of dimes, you know march fundraiser and she goes to one of the DJs at the local black radio station getting John Heidelberg WVOL and asked him to sponsor because he's like, you know, hey, I mean who's got a platform that's gonna get you know My name out to a lot of people get it get sponsors here, you know well with a radio station DJ So when he's talking to her, he's like, you know, you've got a really great voice You should do radio. Yeah, you should do radio. You should have podcast And so he kind of you know tells bunch of his colleagues like hey this this this this young girl's like, you know She's pretty impressive. So she comes back. She does the thing. You know comes back to collect the the sponsorship after after the march and He and a bunch of other folks at the radio station like hey, well, why don't you make a what do you make a demo tape? And so they like have her make a tape they cut a tape there and while she's there And then they will issue at this point because this is like her first broadcast for journalism for a right I think she's 17 at this point. Okay, and does she I mean, I'm asking you as if you're like an Oprah scholar But like do you know is she any inclination of what she wanted to do with her life at this point like was Would she have seen this as like this is my end. This is my opportunity. Yeah, totally like she she wanted to be She was like, you know, she was telling everybody at school. There was um This might have been as part of the you know voting for most popular whatever like there's a survey in school If you know, what do you want to be when you grow up and uh and her answer is famous And you know she'd seen the stars on the on the walk of fame and you know what I mean So they first give her a job just working part time in the studio and then they give her a show So she gets a rate like a real honest to god radio show as a senior in high school. She graduates She enrolls locally in Nashville at Tennessee State University for college It's a historically back university in Nashville colleges like of course. She's she's super smart She loves reading as we'll come up later and education and you know She cares about college and Vernon and Zelma really care about her getting a college degree But really she just wants to focus on the show So she doesn't live on campus. She doesn't live at home. She's making money from the show. She moves out She gets an apartment in town She starts to keep up in her up in her sights Setting them even higher. She decides she wants to get into TV and legend has it that uh So she must have been either fresh morning probably sophomore in college at this point Legend has it that she interviews Jesse Jackson on the radio show. Whoa Jesse Jackson must have been pretty young at this point too Yeah, but already very famous and and apparently after After the interview Oprah says this later. He he tells her he says you have the gift Wow, yeah And this is why 70 1973 and she wouldn't have her own No, she wouldn't start what we know as the Oprah Winfrey show till 83 ish Yeah, this is no this this would have been like 70 or 71 Uh, so yeah, we're like way way fresh apparently Jesse Jackson called it first So kind of on the back of that uh, she's she sets her sights on on TV And everybody at the radio station is super supportive. They know she's she's going places. So Also does does cable exist yet like TV at this point is It is like they're just the broadcast networks right yeah cables like Starting to become a but cable was started. I think we talked about this on the espn episode Yeah, it was really for rural areas that couldn't get broadcast reception at this point in time Right that they would like relay the broadcast Retransmit signals over satellite they'd bounce off the satellites down to the ground tower and then use the cable to distribute just the Yeah, yeah, and I think what did espn start it was a few years later, but it was in the 70s So yeah, like and Ted Turner is starting to think about cable networks, but this is still like We're even still pre like in terms of the types of programming like snl wouldn't start until 75 Um, so we're you know We're in kind of the we're closer to Ed Sullivan than we are to yeah Yes, pn And also this is super important because of all this it's the local affiliates of the big national broadcast stations that that's the That is what people think of when they think of TV and specifically they think of the evening news like the evening TV news That is the You know crown jewel You know, you think the top of TV that's what you think and that's what Oprah's thinking I don't know how much of this was a calculated plan no knowing Oprah a little bit vicariously now I suspect it was in 1972 she enters she's college student at a TSU She enters the Miss Black Nashville beauty pageant It was beauty pageant. It's like you know Miss America style stuff You know with like talent, you know all this all the stuff she wins that and then she enters Miss Black Tennessee She wins that she becomes Miss Black Tennessee. She goes to the Miss Black America overall thing in LA She places like like also how horrible is it that there's Miss Black Tennessee? Total not just like totally Yeah, I mean how like let me please pop up another level and generally condemn the beauty pageant industry But then the racist part like yes But good for Oprah for using that as a platform totally used it as a stepping stone She she ends up like like I don't know like 43rd out of 50 and in the US in the national competition But it doesn't matter she gets back after that To Nashville and her radio station collie at this point So she's kind of proven that she's like you know, she has some credentials of like looks in addition to voice and Employees in front of you know people. So her radio station colleagues call up the local CBS affiliate in Nashville WLAC and tell them like like you got to hire this girl like you got a She's you know she's her calling is beyond radio Uh, and and and one playbook theme that I'll pull forward here is like the thing to keep in mind with every step of the way for Oprah is The default pick for whatever she was trying to achieve would not have been her It would have been an all likelihood of white male and so she always had to do a non-traditional thing To give herself a platform at a credential for a reason why she would be the obvious choice over the default choice and This is a great example of sort of her creativity and her drive to go and sort of acquire whatever credential or whatever leverage She needed to in order to go and and become the person that gets that next spot Yep, yep, and her just continue you know At every step of her career. She's always thinking about the next step And she doesn't in such a way like you know, that's not like you could be Super view that is super cunning and conniving and right. It's not conniving. It's done with poise. Yeah Like everybody knows it like she's she's a super upfront. She's like I want the star on the hall of a They don't walk with it like I want to own it, you know So WLAC brings her on they hire her she becomes the first black woman on television in Nashville I think in all of Tennessee, but definitely in Nashville all while she's still in college by the way and She comes on board as a as a reporter for the for the news So not an anchor but a but a field reporter Turns out what among Oprah's many many great strengths being a news reporter Turns out is not one of them Which she will freely admit so she's not a super great reporter, but People love her like she's got she's got the gift when she's on camera certainly nobody looks like her on television But you know nobody sounds like her either she just talks like she's You think of TV news reporters. You think of like stiff like it over here. Right. Well, blah blah blah blah. She's she's relatable She's authentic. She's powerful exactly She's one of the audience and so she ends up the station. She's like People love her she gets promoted to to be an anchor on the evening news You don't do it so good at being a reporter. Yeah, she can be the anchor Just can't be the anchor stop this stop this reporting stuff very quickly up to that she gets recruited to move To Baltimore and take the co anchor job on the evening news next to Jerry Turner who was like a total legend at WJZ in Baltimore The reason she does it number she makes the move is a Baltimore. It's a much bigger media market than Nashville period But also wjz is the number one station and this is the number one evening news remember evening news crown jewel of Affiliate TV stations of TV. I see a cramant. I'm familiar. Oh exactly exactly You've seen anchor man. You know exactly how this works So Jerry is Will Farrell basically So Oprah drops out a TSU and makes the move up to up to Baltimore so she gets there and probably predictably she and Jerry Don't get along or see eye to eye on On the style. I mean he's like you know super old school Edward Murrow style like Acre the news and She's Oprah and that could work great, but in this case it doesn't work super great So a few months in she gets demoted She has multi-year contract with the station so they can't fire her But she gets demoted from the co anchor spot she gets put in the slot as the weekend features reporter Um, I don't know much about TV, but that doesn't sound good. Yeah, so this the assignments She gets her stuff like she covers um the cockatoo's birthday party at the zoo uh, like yeah Yeah, pretty um Pretty rough. I mean for somebody as ambitious as Oprah I've overcome overcome everything she's overcome And then just had this like shooting star ascent from like high school junior to You know co anchor next to Jerry in a huge medium market on the number one station in just like a couple of years This is a pretty big blow But also like you know Oprah Oprah is not deterred especially after everything she's been through in life like this isn't gonna stop her She like Rolls-up her sleeves and gets to work and she's like I'm gonna be the best damn, you know We can't features reporter Party reporter there is exactly Yeah, like you know the and the seeds of the Oprah Winfrey show are so unright there Um, you know, we're joking, but but kind of true She does that for a couple years and then gets the next big break when The station decides that they're gonna start doing a morning talk show after the news They're inspired by Phil Donacu who's been around for many years at this point, but he's taking off so Phil It's from a house from Cleveland actually originally so he started Then he had moved to Chicago to a big market doing his talk show in Chicago It started getting national syndication and it becomes a major phenomenon like this whole new category You know used to be the daytime talk show that was not a thing until it was not a thing It was like it was so what it used to be before Donacu was you had the morning News and then during the day you had just all you know No syndicated like wheel of fortune like game shows down here has this great quote in In the WBZ podcast with Gen White. I can't remember exactly what he says But it's like you know he's kind of making fun of like you know It was all like come on down and click click click and you know what to do like that was spin you give it yeah Exactly that was that was daytime TV so he introduces this this talk show format and people love it um And we should say these these daytime TV syndicated game shows had massive audience like those things were cash cows when they got syndicated I think We at this time it was wheel of fortune, but not yet jeopardy if I'm remembering right and like those were huge syndication deals Totally and I can't remember when the price is right started but Right that time that kind of stuff But I think it was it wasn't that this stuff was like that compelling It was just they like a lot of people particularly suburban housewives Watch TV during the day they were gonna watch whatever was on this was what was on it wasn't that it was good Uh, right and so when Donnie he shows up and they're like oh wow. This is like actually speaking to us. This is This is good. We'll watch this instead and I think you just said there David I think it's really important to drill home for everyone like We live in a pretty male dominated work culture and society now Then you know in the 70s like Basically dad went to work and mom stayed home and and like daytime TV was for mom to watch whatever mom was gonna watch That's like a really important thing to understand about the sort of kindling that was there for this this fire that Oprah would create Totally well, I think it was super interesting to pull forward a bit is that was true But also there were a lot of jobs. There were a lot of places That were workplaces where there were men and women that had TVs on during the day like Think about like you know the auto mechanic shop or like You know anyway, you name it a 7-Eleven like I remember not too much after this time You know when I was growing up and I was a little kid my parents were were both lawyers They had their own firm and it was test your pencil of A-N-E and during the summers They just bring me along to the firm stick me in the back office with a TV and be like, you know Entertain yourself. What would I do? I watched Oprah all day like and Phil Well, yeah, I mean like the TV you know now we all have our cell phones and you know That's what like the mid 90s. Yeah, this would have been no this would have been even earlier like late 80s early 90s Dude, that's so funny. I was gonna say Uh, it's a aside from our story, but I was gonna say I've never actually watched an episode of Oprah like I've watched a bunch to prep for this episode But before this like the things I knew about Oprah are like Through my grandma because she was a huge I think my grandma may have watched every episode or through headlines and like Through the things you know about Oprah because they were major pop culture moments, but like I feel like we have way more credibility now that you've actually Yeah, I grew up watching a lot of Oprah in the summers and at all these shows more you know like But I think that was the point was that like to again pull forward to influencers and what would this would become with YouTube and the internet and Tik Tok and everything is like Everybody wants to watch something during the day no matter what you're doing Anyway, so yeah, so what was Donnie? He was doing what was his show? So that's what so what Donnie? He was doing was Covering subjects in a talk show format and interview talk show format Uh that were he and his producers were mostly women thought would be appealing to suburban housewives So unlike a game show or something like that what they really tried to do was think like okay Well like what is on these folks minds and what would they like to hear about what kind of questions would they ask if they were asking The guests these questions and then they would put these folks in the audience and then he would go around with the microphone This is he was the first one to do this in the audience and be like you you know audience member ask the question What do you think and he would have celebrity guests on right yep total well celebrity guests and um I think He had the first uh, I believe this is right. I think he had the first openly gay person on TV to like talk about being gay You know, this is like we're talking this happened in the 60s So this is the kind of stuff that he was doing just like human interest type stories in addition to celebrities And this genre kind of evolved like out of morning news right like donnie he donnie he show was an am like a 10 a.m. Or 11 a.m. Show right yep. It was to follow the news got it Uh, so the idea was you know again, we're in 60s America like dad goes to work Kids go to school mom is now watching TV that was the that was the idea for Donnie you so anyway, it took off in Baltimore They the station decides hey, we should we should also lots of local stations. We're saying we need our own morning talk show So they started to start a show called people are talking Which is an amazing name for a talk show like I somebody bring that back totally that should be like that to be like a YouTube TikTok channel like People are talking and so they tap Oprah to like they have the perfect host there. They tap Oprah to host it Amazingly Oprah initially doesn't want to do it because remember like the evening news slot anchoring the evening news That is like that is being as what being a star means that's the like the definition of the top and she's like what is this? Daytime TV you guys already shoved me over to the covering zoos like What do you put me on now? You try and know you know push me even lower on the totem pole But they convince her to do it So she does it and like she does the first show and she's like oh I was born to do this. This is great and people love it and so within you know Months weeks people are talking becomes bigger than donahue in Baltimore So it's only it's only local. It's not syndicated yet It's just in the Baltimore market, but it's competing same time slot as the donahue show and she's Beating him Uh, he's the king of uh king of morning talk and so eventually like you know this starts to get notice in in the media world and Eventually people are talking gets a deal for national syndication and ideas. It's gonna go up and competing in stonohue But it only gets into 17 markets and it kind of flops nationally I don't know exactly why I don't know if it was maybe like two peroculte to Baltimore or just what But it doesn't work and in this indication deal gets cancelled All right, so help us understand like what is a syndication deal? What does that mean? How do you how do you get syndicated to other markets? What companies are involved what economics look like Yeah, the biggest indicator at this point time is a company called king world and I don't know if people are talking was syndicated through king world or or another company But basically these groups of which king world is the largest are Just media rights distribution companies. So they would go around pick up shows Which all shows at this point in time were being produced locally by local TV stations in any given market around the country Pick up shows that they thought have potential and then do a licensing deal with them to Then re re syndicate those shows out to other local TV stations around the country And that's even like the way it would have worked for like a game show like they would develop the game show Exactly. So at a local station for a local market and then a syndicator would come and say hey We think this has national appeal and they would go get it in all the other markets Even though you're still making it there in Baltimore or Chicago or wherever. Yep And so king world had wheel fortune they had jeopardy you know all these shows now what's interesting is is um The this seems so crazy today. I don't even realize this growing up But the you think of you know your local TV station like You know uh, I don't know in in Philadelphia where I was growing up it was uh The channel three was the CBS affiliate you think of it as like oh there's CBS. There's ABC There's NBC the big broadcast networks Those stations are independent businesses They Affiliate with the big broadcast networks, but that's really essentially only for prime time TV you know kind of Right seven pm to ten two hours a day Yeah, they're they're they're producing all their own stuff They're an independent business and so to fill a lot of those hours They'd work with these syndicators like king world to bring in syndicated shows So all this is happening outside of ABC NBC CBS you know They don't really care what their affiliates are doing During the rest of the non prime time hours and all that business is separate. Yeah And the interesting thing about these syndicators too that I didn't really realize is since they're They're getting to participate in the upside of the success So at least the way all their deals tend to start or at least at this time tend to start was either an Arrev share or profit sharing deal So they would come to you they would say Right now you're only getting to address Baltimore D. We think you could play in these 17 markets We're gonna take some cut and and I think the cuts very wildly So I don't I can't describe the prototypical deal But we're gonna take some cut of the ad dollars that come in from whatever those TV networks in Houston and Phoenix and Cleveland are able to sort of generate And then we're gonna give the rest to you and for a station who owns the right to a show You're like great. It's all upside like anything additional you can get is is new marginal revenue does it cost me anything Take whatever percentage you feel you need and of course is not that that cordial But you can see why there's these revenue share or profit share agreements that sort of get worked out to do that So being a syndicator if you get a hit can be enormously lucrative. Yeah, I mean, I think it's been you may know the Detailed economics of these types of arrangements better than me But I think it's kind of inspired by and very similar to like the book publishing industry another industry We're gonna bring up in a minute where you know author writes a book That's a fixed cost investment On the part of the author in this case it's you know local TV station produces a show produces the content That's fixed cost investment and then you work with a publisher to distribute that Around the country or the world and then you share some portion of the revenue from that Yep, and much like the book publishing industry syndication sort of evolves into a guaranteed advance or a guaranteed upfront where they say look We think this thing is gonna do so well. We're gonna give you a big chunk of that upfront and then When you're you know when the number sort of hits the part that we've already given you when then you'll sort of get to participate in this Percent of the revenue above that and so it can start to look really lucrative for you as a creator because the syndicator will fund the creation of your Show on an ongoing basis and so you can sort of see Already the incentives of a syndicator are to lock in a deal as long as possible at the most favorable economics and the incentives of a creator are either to get as much upfront as possible in sort of an advance Or to make the deal as short as possible so that if it if you start to get leverage By being really popular then you can go back to your syndicator and go you need me more than I need you Yeah, and we'll see how that's all and I'm sorry plays out specifically keep the rights to your content So that'll come in one sec. So okay all this is going on even though People are talking fails on national syndication, you know Oprah's still a big star. I'm in Baltimore Then in 1983 is when the big big big break comes so one of the producers on At the station in Baltimore and on people are talking as a woman named was a woman named Debbie de Mayo and And Debbie had moved to Chicago a little bit earlier and joined the local ABC affiliate in Chicago WLS which was owned by Capital cities which will make all a long time acquired listeners and Capital allocation fans smile. Yeah, and so so Debbie's a producer now if you're digging these 70s TV references Go listen to ESPN episode because I think we probably did a much deeper dive on how the industry dynamics of that worked then yep Debbie's now working at WLS in Chicago and They have their own morning talk show a.m. Chicago and one of the co-hosts they've two co-hosts one of the co-hosts Leafs and Debbie goes to her boss and says You got to get Oprah out here like Oprah's ready for a bigger stage Oprah's gonna be the perfect show. She's gonna be perfect for Chicago We got to learn her away from Baltimore So at the time the station had a new boss who is Debbie's boss a man named Dennis Swanson he was there because WLS had been kind in the dumps who is like I think it was lowest among all the local affiliates in ratings and in Chicago and he had been installed by capital cities which owned the station To fix it and of course capital cities run by top Murphy and Dan Burke master capital allocators Warren Buffett calls them the with the greatest Greatest operating duo of all time I think Yeah, and famously very decentralized so install someone Let them run the TV station. We'll get out of their way. Yep. Okay. So Dennis is new. He's there to fix it And he says you know he hears Debbie's pitch he says okay great like what's get her out here? Let's uh Let's do uh, let's let's we'll set up. We'll do a trial run. We'll bring her on the set of AM Chicago. I'll watch her Well watch her do a show and and we'll see she flies out. I think it's like on a Saturday, right? Like they're like we're just gonna pretend that it's a real episode But like it's it's not going anywhere. It's we're just gonna watch it inside. Yeah, that's a mock mock episode Yep, so she flies out she does it and Swanson's blown away. He's like okay. This is Not only is Oprah an amazing talent, but he's like this is the key now Remember Donacue is is the OG, you know the king of morning talk He's recording in Chicago at WGN is his logo where he's producing Donacue and then being syndicated nationally So he's he's there across the street And he's like this is how we're gonna be Donacue. We're not gonna out Donacue Donacue We're gonna zig where he's zagging. We're gonna bring in Oprah. We're gonna bring in a black woman to host this Immediately he takes he takes Oprah upstairs to his office after the mock show and he says uh He offers her the job on the spot 200,000 dollar salary way more than she's making in Baltimore Says you gotta do it. I want you to I want you to start now and and famously Oprah says Well, do you have any concerns? Dennis says no, she says you know I'm black and Dennis says Yeah, I can see that And and then she says and you know I'm overweight and Dennis says so am I and so are many Americans If we do this, I don't want you to change a thing no makeover no diet no new hairdo like you are America like that's the that's the whole point So she's like okay, so she signs the deal Dennis calls up the capital cities brass and they're like You sure about this one and he's like no trust me. This is gonna work You know your job is on the line too with these decisions you make yep. Yep. Remember he's like he was there specifically to fix the station um And he says no, no trust me. This is gonna work and uh of course it does so Oprah makes them move out to Chicago and They debut the show in January 1984. It is Instance success like literally instant overnight. This is this is AM Chicago is the show AM Chicago's the show uh The whole station on the back of this new revitalized AM Chicago without proposing it goes from last in the market to first in the market Half of Chicago literally half of the residents of Chicago Start watching AM Chicago every day. So not just women like like half of the city And remember Donahue is recording in the same city so she's Completely destroying Donahue is his yeah, it's one thing to out Donahue Donahue only in Baltimore But I mean to be scooped to one local market and be Donahue's market and out Donahue Donahue that's a big deal Huge huge deal So a couple things happen on the back of this one Tom and Dan and capital cities are like Dennis Job well done. We are gonna promote you gets promoted up to ABC because we made capital cities had acquired ABC at this point Mino Swallow's Whale was the headline that we talked about on the yes piano episode We're gonna promote you up to to ABC to the national broadcasting part of the business You're gonna run a big chunk of that he ends up running ABC sports where he inherits as a direct report Bob Iger No way yep. Yep. That's awesome. This is that awesome And Bob writes in in right of a lifetime that At first went Dennis kick so Dennis was like this outsider from like you never made the collection This is the same Dennis same Dennis So he comes in Bob. We've been working in ABC sports under root and our Lidge Dennis comes in and Bob's like super skit Bob actually is about to leave He gets a job offer to go join a talent agency. He's gonna leave quit capital cities and an ABC And then he meets with Dennis and Dennis is like no don't do that like I'm gonna prove you And so Dennis then promotes um Bob to take over all of ABC entertainment He moves out to Hollywood Then he becomes COO of all of cap cities and then of course the Disney merger and you know all of that Right and Dennis has the magic touch totally are I suppose like the Uh, he's a good picker. You probably a better. He's a good identifier of talent. That is for sure Yeah, like literally Bob was about to quit cap cities and and go have this whole different life until uh until he met Dennis It's also here's another good tech theme like let's let's pivot away from Iger for a second and back to Oprah like What a contrarian bet to bet on Oprah it takes probably a lot of guts. He promoted Uh super underrepresented minority person to take a huge bet and Put I don't know how much of his career on the line But some amount of his credibility maybe all this credibility on the line Uh, and what he was doing there like nobody should applaud him for altruism It was like a self-serving investment. It was a sort of Non-consensus bet that he was making and saying like by doing something other people aren't doing here that I think is awesome Like we're all gonna go be super successful and he was right and and like I Especially in this moment that we're in now like let that be the message that by Doing something non-consensus and by zicking where others are zagging you can be an enormously profitable Yeah, I mean this was a this was such a classic acquired Pol it cars driving towards the cliff pull the ebrake spin around because like the station was in the dumps I want to approach to fixing it could have been like okay Well, we're gonna you know do operational efficiency which we know Dennis did too and we're gonna like step by step You know go, but he was like okay What's something like a big splash we can make here is the king of daytime TV filled down here across the street I'm gonna bring in you know this super negative. We're gonna be David against Goliath here and like We're gonna throw a different playing field complete on a totally different playing field and like he She and and they dethroned Donnec you in like a week It's crazy So the other thing that happens so Debbie De Mayo becomes gets promoted be executive producer of the show They expand the show from 30 minutes A.M. Chicago to 60 minutes of full hour they rename it to the Oprah Winfrey show Because let's be let's be honest about what this is what the draw is here Kind of in the back of all this Oprah says you know what I need a I need a new agent. I need to like a real I'm a real agent here. I forget who her agent was before Here's the story here and this from a great or a Forbes article So WLS had been paying Oprah 230 a year so she got 230 that first year and then it was gonna go up by 30 thousand dollars each year in her four-year contract And this is from the Forbes story as she tells it she was pleased at first But then began having second thoughts three separate ABC people stopped me to tell me what a great guy my agent was Winfrey recalls And that didn't make sense to me why were people going out of their way to praise the fellow Winfrey's natural skepticism was aroused she sacked the agent she replaced him with a Chicago lawyer named Jeffrey Jacobs I'd heard Jeff is a piranha. She says of her choice. I like that piranha is good Oh boy, I didn't find that that is amazing. It's a great observation like if people who you were just negotiating against are praising your agent Like you got had yeah, you need a new agent. Oh, man. So great. Well Jeff Jeff and Oprah would be business partners for about 20 years He both negotiates a much much much better deal for her and brings her into national syndication everything But two things happen in the in the next year or so that Completely this is 1984 here 1984 85 And that completely changed Oprah's mindset about what her goals are So Jeff when he comes on board He he says like look, I'm gonna get you a much better deal with you know much better with the salary with with WLS and all that and like you know great We'll do we'll do good but any and he does it was like a hundred times more like he was getting her First year salary in the like 30 million category. That was once that was once national syndication started Okay, sorry, so I think I don't know exactly what it was with Uh, when she was just when it was just a him Chicago, but Certainly more so he convinces her like you got to think about your career not just like you don't want to just be talent Like I can negotiate deals for you as talent, you know all you want But that's not interesting what matters is not how much you make it's how much you keep don't be says this equivalent Don't be talent for higher own yourself don't take a salary take a piece of the action So that's you know bumping around in Oprah's Oprah's mind then The other big thing that happens in this time is Alice Walker's novel the color purple is being made into a huge film event with Steven Spielberg as the director and He's going through casting and Quincy Jones has signed on to the project as a producer and is doing the music and Quincy tells Steven Hey, you might want to look into this uh this rising star this rising star TV personality in Chicago Who I think would be perfect to play Sophia Uh in the movie and so Spielberg meets Oprah and of course rest his history there. It's natural so Oprah Uh Oprah plays Sophia in the color purple nominated for an Academy Award for best supporting actress But the thing that happens around all this is Quincy takes Oprah under his wing And introduces her brings her out to Hollywood introduces her to all the real power brokers in Hollywood And she realizes through this through his advice and seeing all this that like the way you get really powerful Isn't to be a movie star It's to own the production Uh it's to be an owner and that's the same thing the take-offs had been effectively telling her like so don't you know The new star is like yeah, yeah, okay. I'm gonna get my star on Hollywood bully guard But literally I'm gonna own the bull of art like that's how you make the real movie and get the real power And this permeates her thinking for the rest of her life like this now we can sort of see everything set in motion Where everything for Oprah becomes about Control only doing things what she wants doing things on her terms doing things that feel authentic to her never I mean we start to wait into a different category here of her obsession and not violating her Relationship and her bond with the audience But it's all sort of tied into this thing same thing where now the important thing to her is that she's in the driver's seat Not that she can go make that next you know tranche of guaranteed money You know, it's really about ownership And it actually reminds me of another episode we did David with uh Recode when we had Cara swisher on you know Cara talked about how The her deal with the Wall Street Journal was hey look We're gonna do all things digital Walt and I and he's an employee and that's all good But I'm coming on contract Walt and I own all things digital you can contract with us for us to have that be a part of your publication for a period of time But that's a thing that I own I don't work for you It's a I think an interesting parallel because it allowed her then to go and do recode and sort of take the the band with her and And have that control you know, this is this is the path. This is the way you become an entrepreneur in the in the media world And it certainly carries much more risk than like a guaranteed Absolutely, I'll repayment from whatever big media company, but You know, well as we'll see with Oprah. I think she's Very glad she took this path and not to mention you need demonstrated success in order to pull this off in your negotiation Because you need the leverage to be able to say like it's look. It's frankly It's worth it for your business to have me and this is the way in which you get to have me as a part of your your publication Yeah, so while all this is happening Kingworld You don't remember People are talking back and Baltimore failed on national syndication. Well, you know there They're not blind to what's happening in Chicago now So they come to WLS and to Oprah and they say hey, we're gonna take this we're gonna take the Oprah Winfrey show National syndicated in a big way not 17 markets 138 markets and did she only do the Oprah Winfrey show for one season in Chicago before Kingworld was like and time to go national The first national show was September 1986. So I think it was two years two seasons in am I don't know if it was am Chicago. It was probably maybe one season in am Chicago then the Oprah Winfrey show just in Chicago and then and then national um, so she actually leaves filming for a week from the color purple tells Spielberg Hey, I got going to go shoot my national syndication deal and he's like oh, okay, you know And so then it all hits like color purple comes out at Christmas 1985 It's huge gets 11 Academy Award nominations Oprah is going on all the she's going on the tonight show. She's getting magazine covers. She's promoting the film But she's also promoting her not her show, which is about to become a national show and she starts to realize like hey This is a virtuous cycle. So um on September eighth 1990 1986 the first a national show is Is broadcast or actually well before that I I came I was before or after she does an interview with uh bill zemi, uh, which was intended to be for vanity fair as part of this like publicity run Uh, and Tina brown who was then the editor of vanity fair uh in what would start a feud between her and Oprah that I think last to this day killed it Uh, the interview ended up appearing in spy magazine instead Um, and in this interview she said she said to bill she said I intend to be the richest black woman in America I intend to be a mogul so like she's the mindset is has has taken Oh, and I use the word mogul in the intras like oh is it fair to call you know would she like that? I didn't realize she actually used the word that's a word So she's pressing the advantage September eighth 1986 the first national show first national Oprah went for show Heirs and 138 markets and on the wbz podcast uh, I think it's Debbie Dimaio tells the story of they tried to get Don Johnson from Miami Vice as uh as the guest and get him but couldn't get him was so amazing. Like yeah, they've only they had Yeah, this is on that that great podcast that David mentioned at the top of the show There's a great discussion of sort of the culture of the Oprah and free show at this point like it's effectively For scrappy women in a room coming up with stories making phone calls hustling and like Doing just heroic effort to put together an hour of TV every day You know, you can imagine what the Oprah Winfrey show turned into hundreds and hundreds of people and producers and just You know massive staff to be able to pull off these these gambits that they did and At this point it was you know, it was a startup. It was Incredibly scrappy and and to be able to on the one hand you're like there are a 180 38 markets How can they possibly not get Don Johnson to come on the show? I mean, they're just hustlers and they they only have the track record of being a local show before this Yeah, well, and so here's this actually is the other piece to the magic that I think then You know, Oprah had the gift right and that got her to this point and she now has the aim for the mogul mindset That's the second piece I think the third piece to the magic that makes Oprah Oprah and leads to all of this is She didn't get Don Johnson as the guest Instead her guest on that first show was an author named Margaret Ken who'd written a book called how to marry the man of your choice And I'm gonna read or I'm gonna read Nasek the verbatim Oprah's Opening cold opening to the first national show, but keep in mind as I'm saying this like What Oprah is in like who she is here and and how she's coming across? So she's this is the opening of the show. I'm Oprah Winfrey and welcome to the now to the first national Oprah Winfrey show And yes, she screams it is like you know the classic Oprah and she says there has been this is the next line There's been so much hoopla about this premiere show that it's enough to give a girl hives I mean, I've got them right now under my armpits One thing I've learned is that no matter how far down you go And I tell you I've been down on my knees with the best of you no matter how low you feel This show always allows people hopefully to understand the power they have to change their own lives Now I don't have a lot of problems in my life. I have to tell you things are going pretty good for me right now But two things have bugged me for years the first my thighs the second my love Life and then she introduces market and like okay, so just like think about that like the the WBC podcast talks about this the target audience is Susie so they identify Susie as like this mythical you know Also is this the first persona like startups are obsessed with like personas for persona development now like they actually Named a false audience member Susie and like had that as a persona that was the person against it's like it's like Amazon where like the empty seat in the room for the customer It's like the empty seat in the producers room for Susie like what is Susie you want to know Susie is a suburban mom and so they're always asking themselves like what is who is Susie who are Susie's friends? What is Susie relate to what is Susie what are the questions Susie wants to ask and like Compare that opening from Oprah to to Donek you to the evening news to anything that's to Pay no the wheel of fortune anything that's on TV right now Susie's their friend like you know, it's just so unbelievably authentic like it's so different than what you're hearing on TV And it's wildly produced in any other daytime slot at this point especially any prime time slot Nobody's talking about hives under their arms or their thighs or like this is like The very first time that the vast majority of viewers are seeing Oprah and they're having this really intimate relationship with her Yeah, so two years later in The highest rated most watched Oprah show Episode in the history of the Oprah Winfrey show happened in 1988 It was not Tom Cruise jumping on the couch. It was not you've got a car It was an episode called Diet Dreams where Oprah had lost 67 pounds on a diet She did it with a product called Optifast Just talks about it on the show Mostly the fasting and when she occasionally did eat it was Optifast Exactly Super not healthy. We'll talk about all that in a sec But it was crazy like literally 44 million people watch this show And then the like the the big You know over the top moment in the show was halfway through she brings out a wagon With 67 pounds of animal fat on it to say like this I was carrying this around like You know, it's got to be that it's laughable and Very problematic in a lot of ways thinking about it now But think back like this is this she was a friend. She was like celebrate like I just went on this diet I lost all this weight like that right here I am in my size 10 jeans. I feel like feeling so good And I want to celebrate you know with my friends. Yeah, and 44 million people watched it so crazy So so crazy so she starts you know they they start getting letters from people from all of the way that's a live number Like yeah, like let's not there was no DVR there was no YouTube. So like 44 million people To enjoy that hour To watch that concurrently It's like nowadays like you know probably the Tom Cruise jumping on the couch clip has over 44 million views I would guess on YouTube these days, but like that's over 15 years This is 44 million people think about a mayor. What is what does America have population wise at that point? Maybe like 320 million people. No, let's not like less than 300 at that point. Yeah, so What is that like a one? It's like only six or six of America the US tuned in to watch that episode simultaneously Un unbelievable And like this isn't the Super Bowl. This is a daytime talk show about a woman who lost weight like But and by 1988 it wasn't just a woman who lost weight. It was our Oprah It was it was our person and this this You know personal quest that she's been on that she's sharing with us. Yeah, and I think that's the thing like Obviously, there's a lot this problematic and like Like Terrible and like a gaukish about that. It's super complicated But it's real like that's the thing. It's real Uh, and and that's who Oprah is Well, let's let's touch on that now because I think Oprah has some quotes looking back on this that are worth mentioning and the top one is I actually thought at that time that being thin made me better and she talks about that she really regrets that she calls it a mistake She calls it hard to watch and she says you can see that my ego is on flamboyant display Uh, I've had to pay the price for that moment over and over and I literally handed the world on a fat wagon platter The story this this you know, I'm editorializing this really buzzy story of is she fat is she thin and of course like You know, she's a person so she's gonna I don't know if struggle with this is the right word but fluctuate or um, you know, she gains weight. She loses weight But the fact that she introduced it in such a big public way It's it's that story that people want to write about in the tabloids over and over and over again every time her weight changes You know She gave them as she says on a platter and it's a tough thing to tie sort of your Self-worth in in your physical appearance like that and I think you know that this is young Oprah sort of flexing in a little bit like look what I can do look how awesome I am And all power to her for doing something that is incredibly difficult But like I think the sort of older wise or Oprah later looks back and it's just clearly so bummed that That she opened up in that particular way. Yeah 100% Let's also be honest too. I mean Oprah has I think we hopefully described here is like an exceedingly once in a generation sharp Media business woman Yeah, and she certainly knew that by doing this she was gonna get these ratings She was gonna get you know by handing the media this story While certainly painful not that like she just guaranteed the next 20 years of headlines about About Oprah's weight you know again super terrible and problematic in lots of ways, but Oprah's in the headlines. She Oprah knows what we'll play yeah So on the back of that it was actually was a little before in 1987 I believe was the last year of the original contract with Kingworld So I think it was originally two-year contract or maybe it was a three-year and it went into 88 But they negotiated in in 87 she earns $31 million in royalties and salary from the Kingworld contract in 1987 And that's when she and Jacob's decide all right. It's time to put the mogul plan into action Yeah, cuz I mean think about when she was just employed by the station. She was making 200k Then she got I don't know how much more but hundreds of thousands of dollars more with a better agent When it was still just the station the syndication deal obviously that's when you get those one Even two orders of magnitude Jump into this 31 million that year from being in 100 and however many markets So what next yeah, so what next is all right. It's time to own the production It's time to start a company. It's time to build a studio So they buy the show from WLS they buy the Oprah Winfrey show or at least the rights to it They negotiate directly with Kingworld They invest 16 million dollars of Oprah's own money Uh to build a state-of-the-art production studio in Chicago and they're gonna produce and they're gonna make Uh not only the Oprah Winfrey show but a lot more Media content too and they're gonna sell it 16 million dollars have her own money and this isn't the Oprah we know today that has over two and a half billion dollars This is Oprah that for the very first time last year made 30 million But she just knows the trajectory that she's on so she's like, you know what? Let's let's put it all back in like let's let's let's buy this thing. Let's own this thing. Let's build this thing So this is when they found Harpo Media so Harpo of course is Oprah both Oprah backwards and the Husband of Sofia's character in in the color purple And so they found Harpo Media and Oprah owns 80% of it Jacob zones 10% and Kingworld gets an equity stake of 10% as well As part of this negotiation and in doing so Oprah becomes the first black woman and only the third woman ever to own a production studio So like I remember this is the power broker, you know club of of the media industry So the first two before her the first two women before her were Mary Pickford and Lucille Ball But both of them of course owned their studios with their husbands, you know Lucy and Ricky Oprah's the first woman that is solely independently doing this first black woman period There's no board Oprah controls everything and again, they start pumping out other content So the first other project besides the Oprah Winfrey show is called the Women of Brewster Place and it's a made for TV movie They know their audience right and so Kind of just like the you know Dennis and You know back in the day the original like having angling that this is gonna work They have an inkling that a made for TV movie targeted a women is gonna work They pitch it to the networks the networks don't want it. They want to air this in prime time on the big broadcast networks The networks don't want it Oprah basically Forces ABC. She has this relationship with ABC and cap cities I think Bob Higer might have been running ABC entertainment at this point So basically forces Bob to if he was to take it They run it kind of like all right. We're doing this to a piece Oprah It becomes the second highest rated TV movie ever So like mass turns out made for TV movie like I don't know how many people watch the Hallmark channel like it's a good idea or the or bone Oprah we've got lifetime or lifetime. I like yeah, this is a good idea And this is this is the you know of the things we're gonna keep coming back to for for Oprah She's got an eye for what's gonna work like she knows what will play she knows her audience She knows America as an audience and we're gonna keep touching on control. We're gonna keep touching on Her drive to be big, but there's this She obviously has this gift of how to speak to people, but she has a real gift For just knowing what will land and how big it will be So okay, so this is the first one. So what did what does she do then to build on that? What did what does she know? It's gonna resonate so Harpo trademarks the slogan live your best life They start selling like notebooks Candles, scented candles with live your best life and you know sold by Harpo like they're getting you know It's like the Disney flywheel here like all within Harpo. This is great She writes an autobiography and biolic how she actually wrote this autobiography She had a deal with a Knapp the publishing house to publish it and then like Oprah's such a genius. She decides at the last minute. She can't publish. It's gonna be too painful to my family And so like what that just generates more media for than like if she'd actually published it is like it was the most anticipated Book of like the century and then she didn't publish it which just made the myth even Strong and so then as a consolation prize. She says to the Knapp. Okay. Well like I didn't do this, but I'll do a cookbook with you And so she they publish a book called in the kitchen with Rosie Rosie was her personal chef Um, and I'm pretty sure it becomes the fastest and biggest selling cookbook of all time Amazing, and it's especially amazing because Oprah is not even like her brand around that point isn't even like I know food Like there's no Like it just happens to be that You know, there is the whole diet thing and like you know, she's had those I think she has the time with Weight Watchers at this point Right, right, right, but the whole like Rachel Ray relationship hadn't begun yet, right? No, that hadn't begun yet Um, so then I think it was one of her producer Dallas McGee comes up with the idea in 1996 fuse later of Well, okay, so this cookbook thing works and she's always had authors on the show and You know, she recommends their books it leads to like a lot of sales and people used to joke that where Oprah held the book Was an indication of what the sales were gonna be if it was in her lap? It was a dud if it was like at her waist It was like okay if she held it up by her face that what if she holds it up sort of like a bible. Yeah, exactly like a well god That's not go there You know that was gonna be the sell too. Yeah, too They had the idea on the show. Well, what if we launch a book club So in September 1996 they launched Oprah's book club with Tony Morrison's song a Solomon is the first book And the idea is they're gonna announce a book give the audience a month to read it and then they do an episode with the author So that year they are Response directly responsible and they do special Oprah book club editions of the book for $130 million in book sales in literary fiction in 1996 Which is many more times sales than the entire genre category had had like in the years before just like Such a brilliant business idea. So pause Announcement for the LP program. This is our big reveal We're gonna launch the acquired book club Woo So it's gonna be part of the LP program the first book is gonna be Hamilton Helmer's seven powers Of course we already have the episode with the author done like doing this episode where you just realized Why it's crazy that we haven't done this for acquired in fact We already have a book club channel that we just haven't sort of like used in the slack for an an organized way But you could run a way worse playbook than just copying Oprah over and over and over again in later decades in different modalities Yeah, well, we'll talk about that in playbook, but um, yeah acquired book club It's happening so here is how it's gonna work Bet and I are gonna choose a book time interval tbd could be every month could be every six weeks We're gonna work that out as we go along and then depending on the availability of the author We are going to do either one or both of an LP episode with the author discussing the book and A LP zoom discussion with all of you LPs potentially with the author if she or he is willing to join us We are also gonna give all LPs access to bend in my notes on the book our notes on seven powers are already ready to go as soon as we figure out the rate Vehicle to get that out to everyone some will be prettier than others Exactly exactly and then Ben mentioned the book club channel and slack that has been sitting there for a while We're gonna repurpose that for use of ongoing discussion of our book club books. Yes We are very excited to to dive in and we are going to borrow from Oprah in more ways than one So at the beginning of this episode David mentioned that you have a box underneath your seat pick that up and gaze inside if you have been considering becoming an LP But haven't yet well inside that box should you sign up is a copy of seven powers by Hamilton Helmer uh with a little note from David and I and Just want to send that out to to new LPs as a thank you and welcome to the book club and that will be going out to our next 100 LP subscribers We also know that lots of you have been LPs for a long time And so we are also going to go back through and pick 100 of our existing LPs to send copies of the book to as a as a thank you So keep an eye out for an email if you're an existing LP or a new LP joining and uh if you live in the US we'll be sending you an actual copy and outside the US we'll send you a digital copy So we're excited and we hope you'll join us. Yeah, we hope you will Okay Back to the regularly scheduled show in progress the other thing that they launched in 1996 made that this is future required maybe come Christmas time round Thanksgiving. We'll do this Is Oprah's favorite things Oh my god, so I did not realize did you know then that um member uggs boots the furry Yeah, I learned this in the research that Oprah was the queen maker of that Oprah made uggs She like she had some uggs she loved them and then that year so by the way the way that Oprah's favorite things work I think it's the first episode of each season I think it might be things I think they switched around when they did it sometimes they did around Thanksgiving right before Christmas shopping Sometimes it was September with the first episode of the season um like the car thing the car giveaway was not random like it was part of a series of things that she started where it was like When I have an idea of a thing that I love that I want to give to my audience like pajamas for example Like we will we will just give them the de-audience because I want them to enjoy it and uggs boots were one of those Uggs boots amazing So we have Oprah to thank and for people to understand the impact of that This got dubbed the Oprah effect the combination of this and the book club It's almost like the Steve Jobs reality distortion field like the Oprah effect is when Oprah sort of endorses something and then Massive sales come out of that the book club in particular She did 70 books over the 15 years of of doing this so the 15 of the 25 years of the show in total There were 55 million copies sold after Oprah recommended it So you know averaging close to a million purchases per book that she recommends So obviously it would spike it to the top of the New York Times best seller Obviously it would make it basically the number one book that year You know most people read a book a year and for a lot of people Like that was just the book that Oprah recommended every year And so the way they that a lot of sort of analysts have sort of Worked it out is when Oprah decides to endorse something that increases the number of people who will do that thing by a million The going back to the cookbook with canop the I don't remember the exact numbers But the story is they were like yeah, we're gonna print like 50,000 copies or something like around a thousand copies and I was like We that's not enough. That's crazy And they're like well we printed the Julia talent cookbook and that's only ever sold 300,000 copies or something You know Oprah said yeah, you're gonna have to 10x your production on this This is a good place is any to talk about You know not only the Oprah effect, but really really what did her audience look like and try and contextualize those numbers a little bit So At this time that we're currently in in the story in the early 90s Oprah would draw 12 to 13 million concurrent viewers every single day to her 4 p.m. show astounding That's like 5% of America at that point in time. Yeah And if you look at over the course of a week the number of unique viewers who would turn it tune into one of her show would be 40 to 50 million So her audience her weekly effectively weekly active users or weekly audience was Like 40 to 50 million people Now there were spikes where and we'll talk about this in a moment But like the she interviewed Michael Jackson and a very famous interview the first time he had been interviewed for 14 years She did it on site at Neverland Ranch That actually got 90 million viewers and at any given time during the broadcast it was 62 million concurrent Yeah, which was I believe it was made it was either the largest or maybe it's the largest interview in television history Yeah, but I think it was the largest um it may have been the largest non-super bowl Television event in history too freaking wild So the the comparison that I want to make here just to like Really drive this home is so people talk a lot about like the incredible amount of attention and users and watches and views on YouTube Where the incredible amount of people who watch e-sports or video games like Well, let's let's not even take that weekly viewer number of 40 to 50 and just look at the sort of like concurrence on a single show on an average weekday at 4 p.m so like 13 million people The largest concurrent number on twitch ever has been when Drake and ninja played fortnight and that was 700,000 concurrent so there there was like This perfect moment in history where the internet wasn't a thing yet so you didn't have the massive sort of fragmentation of all the different creators who would rise up that you could watch So there was a very constrained set of who the creators were Oprah had this really magical personality and this really magical ability to relate with the audience and The way that we were in this syndication era so you actually could reach a national audience It was like she shot the gap she had the right talent and she shot the gap where there was a constrained set of creators But you could reach a national audience and just had way more influence and way more sort of ability to gather people concurrently than on a regular basis Than anyone would ever have ever again. It is it's it's amazing today for Influencers media properties and everything in many ways it's so much better There's so many more opportunities as twitch this YouTube. There's TikTok. There's Twitter. There's podcasts. There's everything Um, there's blogs. There's email and these letters Oprah only had appointment television But because of that there's all so such a Caffinny of content out there. Oprah had this moment where she had the stage Basically all to herself. I mean, yeah, there was Jerry Springer and there was Don Hewin on the bed like you know Okay, she had a handful of maybe competitors many of which she ended up co-opting and you know We'll get into in a sec Dr. Phil, Rita Ray, Dr. Oz these all become Harpo productions. Yeah There's no one Thing that you can attribute it to but certainly a driving factor in what helped was the fact that What she valued over anything else was authenticity and the the trust with her audience and so she would never do anything that she felt would Violate her code or what she felt like people would want to watch on an enduring basis She would never wait too far into the waters of the sort of trashy TV Even though it could bring immediate ratings she felt like that wasn't the thing for the 25-year friendship that she wanted to have with frankly the women of America and That that ability to constantly say no there's this wonderful David Carr article in the New York Times, you know Rest in peace David Carr a triumph of avoiding the traps and it's really about how It's all the things that Oprah didn't do and the things she said no to in the way she stayed sort of true to herself and true to her audience that That really let her keep that for so long Yeah, so in 1999 Couple things happen Oprah renews its time is up for renegotiations renewal for Harpo in the in the king world deal They renew it for 130 million year or what works out to 130 million a year within the in the revenue sharing Plus now Harpo gets equity in king world remember king world got equity in Harpo originally Harpo gets equity in king world as part of this deal That year later that year CBS acquires king world for two and a half billion dollars Oprah and Harpo make a hundred million dollars on that deal Uh in months and that I wonder if it was actually with that capital that she then started buying and bringing in other shows into the Harpo Networks at Rachel Ray Dr. Phil Dr. Oz many of which she had kind of made them originally as guests on Oprah show they bring and start producing those shows and owning them as part of Harpo and then the next big thing Is launches in 2000 they partner with her and they launch oh magazine It becomes the largest most successful magazine launch in history 2.5 million copy circulation right off the bat brings in 140 million dollars in circulation plus advertising revenue in the first year The empire just keeps on growing a couple years later She does deal with serious XM getting back to the radio roots does a three-year 55 million dollar contract to bring Oprah and friends Uh as a channel on serious XM that was the next piece of the empire Yeah, this is in large part. This is harvesting she can't build a bigger audience Unless she goes global or unless You know, she decides that we want to start bringing more more frankly more man into the percentage of of people who are watching my show all the time Like she already addresses the women and some of the men of America And so at this point it's about harvesting that audience and and What you can basically do is see her for a long time say nope my show is the only way that I reach people And then her realizing oh people will pay me for little pieces of all this stuff And I can carve off well Oprah and friends is a thing But it's only audio and it's a different type of content and you know You start to see this sort of like What deals can I cut in what different ways across what channel to reach what segments of my audience and what different media rates can Hound and monetize those so they yeah, we can't not talk about this too the uh other thing in the mid 2000s that she just nails is like She just reaches the apex of her powers as the like celebrity confessional and we got to talk about 2005 Tom cruise Goddardy homes You seem really just overcome with love I love this whole new Tom this is a different Tom. Yeah. Oh, man Amazing so fun to watch on YouTube But that's actually again Oprah to kind of be him. I don't know how much this was intentional But this kind of stuff that she starts doing on the show it's perfect for the internet The old shows were like it was the whole show it was the buildup to the wagon of fat You know all that kind of stuff, but now it's like you get these moments get these clips And then they're gonna be Posted and reshared and reposted on the internet the rise of Oprah and the dominance of Oprah Couldn't have and fortunately for her didn't happen in the internet world But she did adapt to the internet world very well Particularly with all these different sort of media rights and her later launching opa.com and some more stuff will talk it about But the way that she changed the content I think is exactly as you point out David just perfect for these shorter YouTube clips And hasn't gotten as short as tiktok yet, but the like the older episodes It would be a whole like her most bussy shows would be a whole hour long narrative arc So the fat wagon or when she literally moved her show to that terrible racist county where she actually relocated the whole show and did an An hour long show with an audience of mostly white supremacists who were like Explaining to her why they needed to be this all white community. It's an hour of Of one single topic that's gut-wrenching She would later have neo-nazis on the show. I mean she would have this hour long block of television that makes you feel a certain way for an hour That was perfect for then and is not perfect for now and you're right this this Tom Cruise clip like I mean you can even just pick Three seconds wind it back and forth over and over again turn it into a gif and like that's the content And I think that you're right. She's very adaptable. So kind of you know on this going out on top Uh, so she decides that the 25th season of the show is gonna be the last and then she's gonna fully transition into mogul status And she's working on a big deal which we'll talk about in a second in the second the last season of the show I think this is best Most perfectly encapsulated with um to kick off the season premiere and the 24th season they have the black eyed peas come to Chicago Do it. Oh yeah, they got to our event and they do this is when flash mobs internet flash miles or I think they do a flash mob dance They do a special version of I got a feeling with new lyrics just for Oprah. Yeah, well. I am rewrote the lyrics Yep, and they get you know 20 30,000 people to come Uh to miracle my own Chicago they close down the streets they do this thing and then Everybody does a choreographed flash dance in the middle and it's like the most perfect three minute YouTube Think you could ever open the show notes Oprah doesn't know it's incredible She is somehow they they told 30,000 people something that in Chicago that Oprah didn't know and they actually pulled off Like shocking her The most telling quote that she has is you know when they do close down the streets in the miracle mile and everything she asked one of her producers Um are the black eyed peas really big enough to sort of close down you know close down the streets of Chicago and Her producers are like looking back and yeah, I think they are and it's just because she doesn't actually know What the real reason for closing it down? It's it's it's very cool. Well the hard news Yeah, the black eyed peas maybe Oprah is definitely big enough to close down the So um the show ends and it's 25 season in 2010 they do a two-part finale They have you know everybody everybody is anybody is part of it Will Smith Madonna Michael Jordan Tom Hanks Tom Cruise courses back Sans Katie Holmes, I think at this point and uh as part of it aretha Franklin makes it back all those years after the $100 bill given out the windows things amazing grace in the uh I think it was the last episode was just Oprah in the studio, but uh the second the last was in the united center Yeah, and uh pretty amazing um So that's the wrap on media personality But the deal she's working on is so she had been an investor Harpo had been an investor in the cable network oxygen media That gets sold to NBC Universal in 2007 I assume with some of the proceeds from that She then does a deal with discovery in 2008 the discovery channel to turn the discovery health channel Which was struggling into the Oprah Winfrey network and the idea is it's gonna be a 50 50 JV Oprah's everything she had been all the assets she'd been contributing to oxygen now gonna move over It's gonna be her own channel 50 50 JV with discovery and I believe in 2017 I think discovery bought out half of Oprah's stakes and they now own about like 73 74% and uh Harpo on's the rest The plan is they're gonna launch in January 2011 because the king world CBS distribution rights for the Oprah Winfrey show ran through May 2011 so they're gonna launch in January and then by the second half of the year They'll be able to be run in reruns of the upper-infry show Along with Dr. Phil and Rachel Ray and everything the channel actually struggles for a couple years after they launched it But then you know again like Oprah Harpo like to tune in yeah, and let's talk about the channel struggling because what that was is Again pulling forward a playbook thing But we've talked a lot about this notion of a direct relationship with your audience Oprah may have been able to reach all those people, but she didn't actually it's not like she'd email addresses or phone numbers for them They watched channels that she was on and when she moved over to a new channel like a Joe Rogan or you know a lot of like we're seeing it unfold in podcasting now Like she isn't necessarily having ability to reach out to all those people and say hey come on over And so the the first year is very disappointing in the amount of people she can actually reach because and I think she's just has talked about this She underestimated the power of habit. They were used to turning on ABC at 4 p.m. And just kind of see in her And sex whatever yep. Yeah, yeah, it's such a good point. I thought about that. That's such a good point. The other problem is is Yeah, they've got the upper reruns, but there's no new Oprah show really like there's no reason to tune in But in 2012 they sign a production deal harpo does with Tyler Perry to bring over some of his existing TV series that he's been working on and also produce some new TV series for own and And own is the Oprah Winfrey network? No, Oprah Winfrey network. Yep with rebranded Discovery Health and that I think kind of saves the network. So The halves and the have-nots Tyler Perry's the halves and the have-nots become a huge hit Along with other other series that both were existing and come over and new ones are loving him as wrong the pains for better or worse His empire and that kind of content starts to do a whole new generation of folks watching Watching own this is still starting to play out but the the final Ultimate media mogul moment, which we're gonna smile and laugh about here is Uh, Oprah makes it on stage in an apple keynote event Does possibly the worst apple keynote all time possibly the worst what's so yeah, what's the deal with apple look like? So it's still sort of playing out. I think it was more of a announcement vaporware than anything else in 2018 But she entered into a harpo entered into a unique Conoco unique multi-year content partnership with apple That would consist of the idea is they're gonna bring back Oprah's book club as part of iBooks It is an opus book club on opa.com now. She has like a smaller version of it that's continued Yeah, I don't know what ultimately's happened with that but there are also gonna be Oprah interviews on on Apple TV Plus she was gonna conduct interviews. So that has been part of it I don't think that partnership has played out as as intended with the That's been two years or year and a half yeah, the other thing is like that would have to be a special carve out Because she is under exclusive on screen her on screen appearance I think it and maybe it's only for terrestrial Like yeah, it must be not not streaming But yeah, she's exclusively on screen with the Oprah Winfrey network as part of the discovery relationship Yeah, these days Yeah, to kind of wrap it up here in the history and facts, you know, Oprah Oprah achieved her goal. So today Forbes ranks Oprah as the Sixth wealthiest black person in the world the wealthiest black woman and the 10th wealthiest self-made woman In the world and the crazy thing is we'll get into this in a sec But I think the way Forbes values her wealth is dramatically undervaluing her So I suspect it's actually a lot higher than that So there's an interesting thing where in 2009 Um, it was estimated that she was worth 2.3 billion and it's sort of easy to To understand how she got there where she basically had this ramp from making 35 million and 1988 all the way up to making like 200 plus million dollars a year by 2008 and you know that was just Every time she got to renegotiate a deal a little bit more in her favor her audience continue to grow until it plateaued in the late 90s But then she sort of got better and better terms each time all the way until the show ended and so we can sort of see like Well, it's kind of easy to understand how she slash harpo accumulated over 2 billion dollars What's not as clear is In all these deals that she's doing now a lot almost all of them are are Impossible to know the terms other than the discovery deal and so in the last 10 years like you don't Really know and Forbes certainly doesn't know exactly how to estimate Harpo's enterprise value for oprah's net worth so we're still sort of in this same mid-2's number that it's guessing Mid-2's I think I think we saw in the methodology for Forbes they said they added up all the Aftertax Profit cash flow to Oprah that they suspect that they estimate Oprah had gotten from harpo over the last you know 20 30 years Well, that doesn't make any sense you know anybody who knows how to value businesses is you Value them based on the street discounted stream of future cash flows So all that to say there all these properties now that harpo Has their hands and including a massive cable network of which they own 25% Also in 2015 waitwatchers the company was struggling. Did you find this Ben? Yeah, yeah She bought didn't Oprah buy 10% when the when it was really struggling at at nice terms like 30 million dollars Yep, but then she was like oh, I'm gonna be a brand ambassador. Yeah, and so then In large part due to her becoming a brand ambassador like she her leveraging herself She like massively grew the value of that company massively It's estimated to be worth about half a billion dollars now that stake alone that she paid 30 million dollars for five years ago We don't have the time to do the investment banking style some of the parts valuation analysis on harpo and the Oprah empire, but There's no way that it's only two and a half billion dollars. It's way more than that. I mean imagine if like you know Let's just think back to our I think this episode belongs in the whole broadly Affiliated Disney saga because of all the ABC and cap cities Connections here, but when we were talking about you know the Marvel deal the Lucasfilm deal the Pixar deal all these companies that Disney bought If Disney were to buy harpo and that is not a crazy idea that Disney should buy harpo at some point especially is Oprah You know becomes older there's no way with all the asset. I mean think about what they paid for let's just take Lucasfilm Right they bought Lucasfilm which was essentially the Star Wars franchise the Indiana Jones franchise and ILM Uh, for was it and no new films and development. Yeah, no no no. Yeah, just the IP Three wasn't like 3.6 step deal billion something like that something like that Now like at harpo, right? You've got all the library of these rights to all of these shows right like now Imagine Disney plus like how valuable is the entire library of the Oprah Winfrey About that uh not to mention Dr. Phil Dr. Oswitch will ray all this stuff Is that on YouTube right now like all the old open shows? I don't know Would anybody watch it? What's the back catalog of the Oprah Winfrey show worth? That's a good question. I mean Like clearly the back catalog of something like friends is worth a lot these days. No, that's a sitcom not a talk show But like right I think a lot of people would like to watch the back there's at least 30 or 40 episodes that must still get a lot of use Yeah, and then there's all the streaming rates and you know YouTube rights and everything associated with that Uh Then you've got like stuff like oh the magazine and all that stuff Then you've got all the new content that harpo is producing like Tyler Perry's content out there Then you've got the stake in the cable network itself, which is extremely valuable um Yeah, like this is a this is a Many billions more than two and a half billion dollar deal if Disney or somebody else comes along and buys harpo Yes, some other interesting as we tie up our sort of history and facts here Oprah by the numbers Uh stats here the over the 25 seasons They the show received over 20 million letters So like lots of different ways to gauge fandom here, but like 20 million and they're not you know This is like page views not unique users, but like 20 million times people were Strong enough fans to write a letter in like an interesting way to think about this is like if her reach was 50 million people You sort of assume like I don't know one or two percent of your fans could be super fans I think a lot more than one or two percent of her reach or super fans. Yeah. I mean 20 million YouTube comments would be a lot I imagine like the barrier to actually like writing a little letter Yeah, I'm mailing it like yeah Yeah, yeah, it's crazy. I guess the point that I want to drive home here is Yeah, she had reach, but like she had Really intense intense fandom at that point and still today The other place I want to take this that we didn't touch in history in facts and I just want to plan a little seed with people so Oprah Based on her ability to compel people You know not through strong, you know, I need you to go do this, but just by saying it's what she's doing If she says I'm reading this book and I think it's good and a million people go read the book or you know I'm wearing these pajamas and I think they're good and a million people go by the pajamas well she at some point said You know this person Barack Obama is truly inspiring to me There are many research analysts who say that he got a million votes and a very tight election that can be credited to Oprah And there's a whole story that we don't have time to go into around Oprah, you know, not wanting to be political and not wanting to have either candidate on the show from the the 2008 election But you know her early friendship long before he was running for president with Barack Obama definitely led to a lot of people Feeling strongly about him that otherwise wouldn't that well that is a whole another podcast A worth of content for another show I have to do but but this is an example of that a small one Oprah had never had political gas on her show before the 2000 election and then she had both go In which case she gave equal airtime one episode did bush and gore one episode to bush and gore Before those episodes gore was leading bush by 10 points in the polls and They came on gore did like fine was kind of stiff Bush comes on and he like gives Oprah a big kiss. He gives pre-leans to like the whole audience like he he crushed it like he did great 11 points swing bush goes from 10 points behind in the national polls to one point ahead just on the back of The Oprah appearance pretty amazing. Yeah All right, let's move into analysis as yeah as we analyze here the the crux of the whole thing that we are going to because obviously like This isn't a classic acquired episode where Facebook buys Instagram and we value if that was a good use of capital The transaction that we're going to analyze here is Oprah spending the 16 million of her own money to buy out the rights to produce her own show And and own everything outright of course with the 10% for king world and the 10% for Jeffrey Jacobs and what that ultimately turned into and obviously we're gonna be pretty favorable here But that's how we're gonna sort of think about Dimensionalizing what we're analyzing so we talked about Kind of rather than doing narratives or acquisition category Since there's no acquisition, but would like category is actually a good one and maybe specifically a tweekon category in honor of our Book club in Hamilton Helmer and seven powers is well, let's talk about what's the what's the power for Oprah and Harper like what's the defensibility? Maybe especially in this new influencer world that we live in where she's not the only influencer out there The the question is would Harpo have the majority of its future economics if Not for the relationship between tens of millions of Americans and Oprah that comes from the past like I'm tempted to say that the biggest value driver for Harpo is Continuing to monetize a relationship between Oprah the human and a third of America or a quarter of America We can talk about sort of what power that fits into but you have these these other properties that aren't Oprah specific like Dr. Oz and Dr. Phil and Rachel Ray, but they're still Oprah Brand kind right. I think the the main value driver here is people trusting Oprah and wanting to continue that relationship Here's an interesting question Is that relationship with Oprah because I totally agree with you that trust that relationship with the concept of Oprah that so many Not just Americans but people all around the world have now does Oprah need to be alive for that to be the case like Clearly Walt Disney doesn't need to be alive for You know for for me to want to fly to Disneyland several times a year right now, of course that's different like Mickey Mouse doesn't die You know like that so it's it's a it's different it will be interesting, you know Hopefully Oprah will be with us for many many many years to come. Well, let's let's take mortality out of the equation And let's just say whether she's in the equation or not. So like could she sell Harpo for five to ten billion dollars And you don't have the rights to me anymore. I'm just gonna be on promise land my ranch in uh by the way promise land I can't resist in Montecito is one of if not the probably like top five or ten Highest valued real estate properties in the world. Whoa five mile long driveway It's uh, yeah amazing You know who else has a place in Montecito is Jeff Jacobs. I think he has like a sixteen million dollar more modest to state Um Your buy more modest to stay. I mean yeah understatement of the century. So on that though, I think What's interesting and with what Harpo and Oprah and with own and this the discovery deal have done in the last since ending the show is I actually think it's a lot more viable that The value of Harpo continues without Oprah being actively involved now then that would have been ten years ago because This let's just look at own the network. You know, it's not really just Oprah's properties that are driving that anymore. It's Tyler Perry's properties that are driving it Well, I guess that's probably the biggest one. I was gonna say oh the magazine and then there's more than that I haven't spent enough time with oh the magazine to know how much of it is Oprah these days versus other stuff. I'm like the Oprah one for sure. Yeah, yeah It has good circulation for magazine, but it's you know, diminimous relative to like modern internet properties So I guess what I'm gonna say here is if I was to apply a Hamilton Helmer power I guess it would be a cornered resource where Oprah is the cornered resource and we'll get to this in grading, but like Harpo is worth a crap ton with Oprah and I think a lot lot less without her Yep I think that's about you interestingly though. I was also gonna say cornered resource. I think back Free this era in the older era of The Oprah Winfrey show and the early days of Harpo. It was two cornered resources. It was Oprah but it was also the syndicated distribution deals That were a cornered resource because it's not like There could have been another Oprah out there. There probably were other people who were just the talented at Oprah But unlike today where anybody can you know turn their selfie camera on Back then it was such a barrier to entry to have those Distribution deals in place that nobody could Can be with that. Yeah, and you bring up this other concept to David of like And this exists with an influencers today. There's a network effect within audience So there really is a critical mass thing that happens where if you could watch Oprah that was doing all the exact same things that Oprah was doing Or you could watch someone identical to Oprah that no one's ever heard of and your friends weren't talking about And other people wouldn't be reading those books and other people wouldn't be buying those products But still had the same charisma amazing guests You just would never watch that one because you want to be a part of the cultural zeitgeist that Oprah is creating In some ways it's an audience network effect the obvious Modern-day analogy to all this is The Kardashian empire right with the Kardashian West empire now Combined and actually this is also this kind of federation and the way Influencers work today is it's not just one person. It's this like it's a crew right? So you got Kim you got Kanye you got Kylie You know like Kylie's got her cosmetics brand and Kim's now doing a podcast with Spotify I hope we'll talk more about this in playbook and to come but yeah, I think there's really something to this audience Network But it's now like a federated network across influencers That's true. Yeah. Yeah, you have to imagine there's audience overlap between Dr. Phil Dr. Oz Rachel Ray like in the the different jobs to be done in a Shared audience by each of those creators in the same way that yeah, there's like influencer cadres that each serve a different job to be done For a same person in the audience and if you can successfully build that which you know You got to think Oprah is on our way too, but if you can successfully build that then that's how Oprah can sort of make her exit from it and it retain value on its own Okay, let's go to what would have happened otherwise So like what what if Oprah didn't spend 16 million and kept working for WLS like I mean first of all she just She might have stayed as important in the cultural zeitgeist, but I think it's telling This is also in the podcast you reference at the top of the show that Oprah felt like She was doing wrong by other people at the station By being so successful so when she would see people in the elevator and all their shows were fine But not nationally syndicated and she was queen of television It created cultural problems at the station. So like she talks about how she felt that she needed to bring the Oprah show Into its own physical space just to Detangle from you know all the existing incentives that existed for everyone else in the building The easy thing to say is you know She never would have become the mogul with the power that she has today and that's really what she wanted So she probably wouldn't have felt that she was doing right by herself but it's also hard to guess what the unintended side effects were Of staying in that in that station I have to imagine that if we were to ask Oprah this question it would be like well no but like Everything is so much better and mind like I can't imagine she regrets that decision One I owed but I think a lot of that though is just like her own like you were saying her own ambition like The alternative universe is she looks like what most movie stars look like is talent, you know Yeah, maybe they have their own production quote-unquote production studios But they're not really like doing that. They get an executive producer credit for sure Right exactly. That's just like forgetting some extra points on on the deal really they're just talent and Not entrepreneurs Oprah have decided to become an entrepreneur Yep, that's a great to great way to put it Okay playbook so for folks who are new to the show in this section We basically say look if someone wanted to do something like this What's the playbook that they should run? Not to say anybody could duplicate literally anything that we cover on the show But like what are the themes that we notice that led to their ability to pull this off And David the first one that obviously comes to mind that we've mentioned three times now in the show is she really was the first influencer Invented a lot of these strategies and there's a big one that we didn't touch on yet that that I was shocked in when I did the research And I shouldn't have been shocked but I was and that is the car giveaway where she gave away How many 2676 cars totaling eight million dollars and they were Pontiac G6's I don't know when my head they were now that's not what they were But that is what she gave away I thought this whole like Oprah's giveaways thing is she's so rich She doesn't need to be rich. She doesn't care about being rich. She loves her audience. So she buys some things That's not at all what happened This is a million dollars that Pontiac yeah Pontiac spent all the money And they were like this is well worth it for our advertising are you kidding me how many cars and like it It took it took us some effort to get them up from 25 cars all the way up to the 276 by their producers But like this was Oprah being like wait a minute. I can give stuff away that other people pay for And I think like that is a thing that you see across the whole YouTube ecosystem now Of sort of sponsored products and Marquez just did a sponsored video with Buick right like we didn't give the Buick away But like he did an unboxing of a Buick and like Yeah, that's the legacy of of Oprah right there right so I just wanted listeners to know that Oprah didn't actually buy all those Pontiacs that Pontiac did it and you know, I have to imagine that was a like you can buy one super bowl ad slot for a million bucks or you can Buy eight and have us all still talking about you get a car you get a car you get a car So legendary ad deals the way to think about that and at the end of the day all those zombies members got the cars You know like they still depict because it was a gift that pay taxes on it's complicated But so they could get the net cash or they could get the car and pay the taxes anyway That's neither go to there. Okay for playbook though So I think I wanted let's spend a second and talk about Okay, super clear analogy as we've talked about all along between Oprah being the first influencer now into modern influencers like we just mentioned Marquez and KBHD and all these youtubers And then you've got the Kardashian West empire out there You've got George Clooney and Kassamegas with his tequila brand like Well, let's talk about what are the things that are different now It's different in that you don't need the distribution deals. There's no buried entry You can just throw up a podcast feed you can throw up a youtube video you can jump on tic-tac You don't have to cut the deals, but you still need to spend something to get distribution and it might be spending on Honing the content, but you do have to I mean everybody even though your stuff's freely available You have to figure out a way to make it occur to people that they should watch that's what I was getting to is like you can The gatekeepers are gone But long live the gatekeepers right and the gatekeeper being like you got to rise above the noise and Create something compelling that's gonna get people's attention and be worth watching amongst the sea of All the content out there. Yeah, the gatekeeper is a lack of scarcity like now that there are no gatekeepers There's millions of people hundreds of millions of people creating content the interesting thing to observe here is for the influencers Who do rise above the fray you see them cutting traditional distribution deals because they say gosh I have lots of money Can I just pay you to distribute my content? And so that when you sort of see the influencers emerging from youtube and going on to more classic mediums The ability to sort of buy and bulk and have predictable economics is still still beneficial. Yeah Okay, two two quick things. I want to say one is what you talked about with cars I just want to label that as a playbook theme which is for this type of business for an influencer business like monetizing Your product recommendations and average like the kind of native advertise like this is the first native advertising that happened and like that is a Great business bottle for for this type of business The other thing About how this is all involved with the internet is you know bentobs is written about this ad nauseam so we won't believe at the point but is Like Oprah worked and over could be the best like she was mainstream she peeled to Certainly just about every woman in America, but lots of men too like like massive big wide lands Now You don't have to do that with the internet you can aggregate a netch audience so like you can have influencers in Business technology like that like us, you know like you can have influencers in Uh, yeah, I was really hoping to make culture of this whole thing without you ever labeling us an influencer Okay, we this is that we got it to stop Talking about no, but you're right like if you think about the ways that influencers monetize Yeah, there's the sort of like native advertising paid placement type of thing There's the notion that you're gonna create really intense fandom within a niche Which she just had a freaking huge niche and there weren't a lot of other people competing so like the niche was women Yeah, and so you know she's able then to carve that up audience up as more channels emerge into more niche down Versions and then monetize them each in a different way through the magazine through the website through YouTube views Through whatever else. Yeah, those are good good good themes nobody was ever gonna make a Nationally syndicated Television show about like the business of technology in 1986 like But now the internet The way that I labeled this theme is she had the perfect timing where you could reach a national audience But everyone couldn't reach a national audience and this could never happen again like you can never reach an audience This wide rise up this quickly and have the intense type of fandom that she had ever again The other one that I just really want to call out is the benefits of a zero marginal cost business So from a Forbes profile that is linked in our show notes We have the 1994 economics of the Oprah Winfrey show where Let's see the show grossed $196 million Harpo is paid a hundred million of that so we sort of know what the revshare looked like with Kingworld Oprah made 74 million of that hundred personally and so already by 94 she was making 74 million dollars a year Let's pop back up to that gross revenue number 196 million Show only costs 30 million to produce Wow That's some good EBITDA margins right there Okay So what is that? It's a 85% is that right 85% EBITDA margin I guess it depends what you say production costs are if that's a gross margin or if that's a unnat margin But in either case an 85% margin is amazing and The takeaway here is if you run a business where your costs are fixed to the type of content or software or whatever you create And then your audience scales completely independent of that so for every additional person she added that watch the show She got you know one person's worth of revenue But it didn't cost an additional dollar to get that person like Holy crap. That's a good business and so It's interesting that they were able to produce something with four people That then scaled up to you know hundreds of people to produce it But still their audience was so big that it massively outran the revenue massively outran the cost of the show This was the whole thesis of technology and software adventure capital up until People started realizing that oh you can also build tech enabled businesses with Laura gross margins in the real world Which of course you can but it's a very different business then the you know This is why the median technology businesses are so linked is they are zero marginal cost businesses And when they scale they just create beautiful beautiful businesses in economics Yeah, also let me revisit that and say I think this is a gross margin because at the very least the Oprah has to pay herself out And that's gonna eat into the EBITDA margin Gotta pay the mortgage on the promised land that's right So uh the amazing economics of a media business if done correctly where you have sort of much like a software business uh appears off our business Capt fixed costs and potentially unlimited or zero marginal cost created unlimited upside Tom Murphy and Dan Burke a capital cities were among the first to realize this indeed Well, I think uh good time to move into value creation and value capture So Oprah created a ton of value in the world managed to capture a lot of it. Let's talk about If what she did was good for the world and this is something we started doing after our uber lift episodes Oprah I pretty undeniably is good for the world like it's hard to find an area where you're like gosh, Oprah making all this money. It was actually bad for the world that she was in business The interesting question that I'm sort of noodling on is you know, she's got billions of dollars now And and a lot of it's tied up in Harpo It's not like she has kids So what's she gonna do with all that money? She's she's donated a lot to charity She probably will continue to donate hundreds of millions of not billions more But it's actually an interesting question to say what will the Oprah's legacy? Yeah, well it actually it ties into I hadn't thought about this until 15 minutes ago in the show But it's directly tied into what happens to Harpo in the future at some point There needs to be a home for Harpo especially because of this like there's no Oprah doesn't have any biological errors right now Or she could designate other errors, but that's 80% of Harpo A ownership like it needs to go somewhere so like like Disney needs to buy like somebody needs to buy it or store it or something so I think this actually points to At some point in time in the next you know years to decades I think we're gonna see a Lucasfilm marvel type Deal for Harpo for sure whether with Disney or somebody else we almost have to Still doesn't answer the question though of like what is Oprah do with all the money So we know is she is not signed the giving pledge I believe but she did attend the first giving pledge dinner Yeah, she's in fall to the money I'll get a lot of money over there Yeah, and it's interesting because like we we don't take this angle with other companies like when we did our Amazon episode We didn't end on what will Jeff Bezos do with those money, but like No other company is so intrinsically tied to a person that we've ever covered Like that it's it's what's in the owner's tradition right like Amazon, you know, Amazon's public company is 80% not owned by Jeff Bezos Right So all right, well, let's move on to grading So for again folks who are newer to the show we basically grade how good of a use of capital was it for big code A by little co and compared to everything else they could have done with it in this one work rating How good of a use of $16 million was it for oh, Proto buy out the rights to a show like I don't know if it's an ARNA plus What's the like on an absolute dollar return it can't possibly be an A plus but on a multiple perspective It might be up there It's clearly either an A or an A plus we can't decide which until a transaction like we just talked about happened And then once that happens then we can say like okay $16 million back in 1988 I think it was right what's the IRR on that from that point in time to The 80% of the value that Oprah realizes from the sale of Of Harpo if and when that should happen Yeah, but the bottom line is it's incredibly hard to find a better use of $16 million then she did in 1986 I mean she created a compounding machine with with Harpo I mean that's that is what you're trying to do when you're creating businesses a cash flow compounding machine and She's done that and did you know got her Got her the promise land. Literally got her to the promise land for sure All right carve-outs Carvots so mine I have been reading this perhaps we've been into like 80s 90s moments here Like this is this is so great. I'm loving it. I've been reading the dark tower series by Stephen King Which I always thought of Stephen King as like 90s horror author The dark tower series it's it's like it's amazing. It's basically Intentionally but unintentionally, you know, this is his attempt at like an un-American Lord of the Rings It like kind of fits the bill like it's excellent. I'm about two thirds of the way through it It's like probably eight nine thousand pages in total, but just like so so good It's about Roland the gunslinger and many many other characters along the way, but Highly recommend nice. Well, Stephen King's also a great follow on Twitter. He's got some some fire takes Minds quick and it's only gonna be quick because if I say too much it would spoil it For people who listen to reply all I'm going back and listening to some of the most popular episodes that I've never heard If you haven't listened reply all and you like this show I bet you'd really like that show episodes 102 and 103 long distance parts one and two Starts with the host getting a phone call from a 1-800 number that he thinks is trying to scam him And he picks it up and rolls with it and it goes to like an unbelievable place that you would never guess over the course of the two episodes And it is totally thrilling so for those who have listened to it I'm sure you're not a long right now and enjoyed it and for those who haven't go check it out Okay, wait Awesome, well we are we are landing the plane we're bringing home Audience uh, we hope that you live your best life If you have some some time I think five to ten minutes we would deeply appreciate you filling out the acquired survey Uh, we do this probably once a year to get a sense of how we should make the show better and um and really what you like about it What you don't what we can change and and who you are And if you aren't subscribed and you you like the show Well, we really think you should hit the subscribe button in your podcast player Uh, or you can go to our website at acquired.fm and sign up to receive new episodes via email You can also join the slack or listen to any other episodes on there so Without uh any further ado, we'll see you next time. 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