Oprah (Harpo Studios)

0:00 Did you see the I think this was a tweet. Is it Tom Morello uh that uh has a You don't have to go to Harvard. Yeah. Actually I did. Uh really good.

0:13 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 Rosenthal. And we are your hosts.

0:36 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 PM for the 25 year run of her show. Dobra Whitfree show So great. It is.

0:59 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 T V 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

1:23 An influencer. If you watch a YouTuber, TikToker, 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 uh the David Dobrik YouTube a little bit ago where he and his his crew jump around LA and tossed out like, you know, gifts to uh he was tossing out like PS fours and cell phones and Xboxes and then like tossing out like ten thousand dollar checks and stuff, and it's like Yeah, I guess. Yeah. You get a car. You get a car. You get a car. Oh, we will get into it. Oh yeah.

2:05 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 are 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, uh, 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.

2:34 Trial. And We have a big announcement. about the L P program coming uh later in the show. So we're we're gonna um 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

2:54 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. Yeah. All right listeners.

3:06 Now is a great time to talk about a new partner of ours here on Acquired, Lagora. The agentic operating system that is redefining how the world's best legal teams work. Yep. It's sort of obvious that AI is gonna completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Legora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry? So the founders did exactly what great founders do. operate with obsessive customer focus.

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5:00 Eighteen months. truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in house at a company,

5:19 You can learn more at Lagora.com slash acquired And just tell'em that Ben and David sent you. 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

5:36 Disclaimer before we get going. is any time you're talking about Oprah There is way too much to cover in um one podcast episode, little in one podcast, little in one show. I mean, we're talking about a woman who uh owns her own cable network, you know, gets presidents elected.

5:53 So we can't cover it all here. We're gonna be covering her origin story and the business behind her, but to fantastic sources if you want more Oprah and who doesn't want more Oprah that you should um go check out. One is The local Chicago MPR affiliate, uh, WB E Z did a great podcast a couple years ago, uh that Jen 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 Donathu. It's great.

6:22 And then the other one is a number of years ago, Kitty Kelly wrote a Unauthorized biography of Oprah, which is extremely Well researched, controversial in many ways, but um also forms a lot of the facts and basis for this. So uh Definitely go read that if you want a long Yeah.

6:40 Or Should I say. Orpah. Gail Winfrey, because that is the child that was born.

6:48 On January twenty ninth, nineteen fifty four. In Casiesco. Mississippi. Yeah, it wasn't as something like people mispronounced her name and so she just said, Ah, screw it and changed it when she was younger. Yeah, so Orpah is a biblical character in the book of Ruth. That was Oprah's name, but yeah, people is not a common name. Uh

7:09 mispronounced it or you know, read it incorrectly and just started calling her Oprah or Opie when she was young and uh 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 uh got her to become Oprah that we know her today. But

7:31 I think a lot of people don't. I didn't before researching this and this is just like Yeah, this is up there with Andy Groves' story of just such an incredible, incredible triumph over adversity to entrepreneurial success. So Wpra was born, uh in nineteen fifty four in Mississippi in the deep south.

7:49 She was born to a single teenage mother. Fernita Lee. Who was a housemaid. Her mother and the family believed that Oprah's father, Orpah's father, was A man named Vernon Winfrey, and he believed that too.

8:04 It's actually extremely unlikely that biologically he was her father, uh, because he was on active military duty nine months before uh 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.

8:26 Orpa who already then had been started people were starting to call her Oprah, uh was raised by her grandmother until she was six years old. Her grandmother taught her to read, uh, and started taking her to 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, uh, even as a tiny little child. That would that would go on to become a big theme in her life a little later. Uh, but then in age six, her mother was living Vernita was living in Milwaukee, Wisconsin at that point in time, had had another daughter, a half sister to Oprah named Patricia And she sent

9:07 back home to Mississippi and said, You know, I'm ready to Be a mother, send uh send Oprah and and I'm gonna raise these two. girls together. Patricia very sadly would die from a drug overdose at age forty three. So Oprah. goes to Milwaukee, lives with her mother for a while.

9:23 While she's there, Vernita has another daughter who she puts up for adoption that Oprah wouldn't even know about until Like Only a couple of years ago they were reunited. And a son named Jeffrey. who would later die in the AIDS epidemic. Uh so just a terrible, terrible tragedy.

9:40 befalling this family, and we haven't even gotten started yet. Oprah shuttled 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 have been trying to have their own children, uh, but were not able to. So loved when Oprah would come to visit. And then at age nine uh so between six and nine she kinda shuffles back and forth. Between at age nine, though, she goes to live somewhat more permanently in Milwaukee.

10:14 And that's where she talks about um One night she was watching the Ed Sullivan show in uh on the television in her mother's apartment. 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 it's all been, but like To have a Motow group, an African American group, a black group, uh

10:36 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 ten 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.

11:06 Wow. Yeah. That's 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 like a key piece of who they would become a

11:20 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 earshot wants to avoid that, you should skip ahead about seven minutes from now.

11:39 Thanks. Yeah. Unfortunately though, uh so that was that was, you know, a great, great moment that would become a driving force, you know, in Oprah to this day. Unfortunately right around that same time. There was a terrible moment that would also set her down a path that uh

11:54 Fortunately she steered back from but uh she was Right around that same time when she was nine years old, uh, she was raped in Milwaukee by a nineteen year old cousin. As you can imagine. Completely shattering system. Nine year old to be

12:10 Raped and exposed to Everything at that age. Uh she started um Spiraling. She started. Drinking, she started running away, she started having sex regularly. Also, she's nine. Like what does spiraling even mean for a lot of the things that I've been

12:27 I i this is heartbreaking. Totally, totally heartbreaking. The family doesn't understand and Oh, 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.

12:44 Yeah. She's spoken a lot about this and um can't even imagine. Uh when she's fourteen, she uh 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.

13:01 She runs away from home in Milwaukee and uh Aretha Franklin was in town in Milwaukee giving a concert. And she sees her in a limo and uh Oprah runs up to her in the limo and starts sweet talking Aretha and 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, and Aretha gives her a hundred dollar bill. And Oprah of course then goes and like rents a hotel room for the week. And uh supposedly when Vernita finally Finds her she calls up Vernon and says, I can't I can't deal with this with this girl anymore.

13:36 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 Aretha, and Aretha will come back later in the story. Probably the just the best thing that ever ever happened to Oprah. She goes to live with Vernon and Zelma. They instill strict discipline, uh and try and straighten her out. They require her to um 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 school work.

14:08 You know, kinda chafes under this and you know, it's just not happy. Um And uh she's particularly not happy because um she has a she has a secret, which is that she is pregnant. And she tries to hide it from her family. Uh, she goes to East Nashville High, uh, the first class to integrate the school. It had been an all white school uh before that class. Oh, I didn't realize that. Yeah, crazy. She tries to hide it from everybody. She kinda, you know, sulks in the back of the classroom and what and then a couple of months go by and that winter, uh, Zelma Kind of figures out what's going on. And uh and Oprah's getting

14:43 Bigger of course, and um could no longer have it. So Elma takes her to the doctor, forces her 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. Can't imagine. So through all of this. Oprah ends up going into labor two months early.

15:03 She has a son, uh, baby boy is born in February nineteen sixty nine. Oprah had just turned fifteen. And because the baby was born. So Or legion and You know, at that time she was you know, didn't have the care that uh preemies have today. The baby ended up dying a month later in the hospital.

15:23 And uh so sad. So sad. Th th d just looking at this six year span, we we've covered a lot of people on this show who have overcome Adversity. Uh Oprah's Story is

15:38 Almost incomparable in the the amount of trauma that she went through in those six years. You know, we've said a couple of times the phrase you and I both said it, I think. I I I can't even imagine. It's so It's so far outside the lived experience uh that I've had, and I'd imagine the same for many of our listeners. That

15:59 It it it requires like a different set of words than I really have for this. And in in doing the research for this episode It is truly unbelievable and and and just a unbelievable story of character and willpower and uh who Oprah is as a human that she was able to

16:16 become who she became after going through all of this. Terrible, terrible events. Yeah, and you know The only thing I can the story that we've told on the show that I think can Even

16:29 come somewhat close is is Andy Grove's story, you know, living through The Holocaust. You know, the just heartbreaking thing about Oprah's story here is like This still happens, you know? This happened for so many people and this still happens. Uh and um Yeah, David, you touch on something important there. These are manifestations of systemic problems of racism, oppression. And also of violence against women. I mean it it's not just one story about getting a bad luck at the draw here.

16:57 Yeah. So the pregnancy and The baby and the baby dying was a totally secret. Vernon and Zelma knew uh and and and Oprah, but nobody else knew the family kept it. Completely hidden.

17:13 Didn't tell anybody until nineteen ninety. So many, many years later, well after seven years into her show. Uh yeah. You know when O when it came out and and Oprah finally talked about it. Vernon, you know, has a quote, uh 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.

17:48 It's hardcore. 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 for now in, you know, late winter of her sophomore year in high school. And she

18:03 Just completely completely reinvents herself, she says. This is a quote from her. I went back to school and not a soul knew 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 um her English teacher's class and you know tells her this the English teacher says, Okay, you know, great, I'll I'll encourage you. And and so she gives Oprah introduces her to a a book of poetry by James Weldon Johnson. Called God's trombones.

18:38 Eight Negro sermons in verse. Oprah. loves these th this book, the these poems. She starts doing kinda dramatic readings of them in the community and and in churches around the city. And she kinda starts becoming a local celebrity. Like her her readings of these, you know and and again, nobody knows her secrets, right? But like for a fifteen 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.

19:09 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 fifteen years old. She visits the Hollywood Walk of Fame and uh 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. Combined the whole walk. I get into the encouragement of her English teacher, I think. She joins what is was then called the National Forensics League at school. Uh it's now the National Speech and Debate Association. And she starts giving orations and speeches at, you know, educational contests, uh, locally and then around the state. She starts winning

19:57 These competitions. Then she starts competing nationally. She's traveling all over the country. Winning competitions, she goes to Philadelphia. She wins a major competition there. She ends up uh I think the next year, maybe uh I don't know if it was the it'd 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 nineteen seventy one, she gets selected as um the White House. This is kinda crazy. The the Richard Nixon White House uh at the time held this thing called the White House Conference on Children and Youth. And it took place in Colorado. And uh Like they selected high schoolers to Oprah on the back of this. She gets back to Nashville.

20:43 And uh she ends up participating in the uh March of Dimes, you know, March uh fundraiser. And she goes to one of the DJs at the local black radio station, guy named John Heidelberg, uh W V O L, and asks him to uh sponsor her'cause she'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, uh you know, well. 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 you should have a podcast. And um so uh he he kinda, you know, tells a bunch of his colleagues like hey this this uh 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 uh

21:34 And so they like have her make a tape. They cut a tape there and while she's there. Uh and then how old is she at this point?'Cause this is like her first broadcast vr journalism foray, right? I think she's seventeen at this point. Okay. And does she I I mean, I'm asking you as if you're like an Oprah scholar, but like do you know if she had any incl 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 in, this is my opportunity? Yeah, totally. Like she she wanted to be but 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 or whatever, like there's a survey in school of, you know, what do you want to be when you grow up and uh

22:17 And her answer was famous. And you know, she'd seen the stars on the on the walk of fame and you know one of the um 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 enroll in Nashville at Tennessee State University for college. It's a historically black university in Nashville. College is like Course she's yeah, she's super smart. She loves Reading as will come up later, and education and you know, she cares about college and Vernon and Zelma really care about her getting a college degree.

22:54 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 keep up in her up in her sights, uh, setting them even higher. She decides she wants to get into TV. And legend has it that uh so she must have been either freshman or probably sophomore in college at this point. Legend has it that she interviews Jesse Jacks on the radio show. Jesse Jackson must have been pretty young at this point too. Yeah. But already very famous. And uh and apparently after after the interview, Oprah uh says this later, he he tells, he says

23:30 You have the gift. Wow. Yeah. And this is why it's seventy nineteen seventy three, and she wouldn't have her own she wouldn't start what we know as the Oprah Winfrey show till eighty three ish. So it's like a decade. This is no, this this would have been like seventy or seventy one. Wow. Way, way pressure. Apparently Jesse Jacks called it first. So kinda on the back of that, uh she's she s sets her sights on On TV. And everybody at the radio station is is super support. They know she's she's going places, so it's does does cable exist yet? Like T V at this point is uh

24:07 is like j' just the broadcast networks, right? Yeah. Cable's like Starting to become a but cable was started. I think we talked about this on the SPN episode. SPN 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

24:27 They bounce off the satellites down to the ground tower and then use the cable to distribute just the Yeah. Okay. And I think when did ESPN start? It was a little few years later, but it was in the seventies. Yeah. So yeah, 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 seventy five Um so we're you know, we're we're in kind of the We're closer to Ed Sullivan than we are to ESPN. And also this is super important. Because of all this

25:03 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 nineteen seventy two, she enters she's a college student at uh at TSU. She enters the Miss Black Nashville beauty pageant. Uh beauty patches like you know, Miss America style stuff, you know, with like talent and you know, all this all the stuff. She wins that. And then she

25:44 enters Miss Black, Tennessee. She wins that. She becomes Miss Black, Tennessee. She goes to the Miss Black America overall thing in L she she Places like like that there's Miss Black Tennessee. I mean, yeah. I mean how like let me let's pop up another level and g generally condemn the beauty pageant industry, but then the racist part. Like

26:07 Yeah. Uh 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 forty third out of fifty in in the US in the in the national competition, but it doesn't matter. She gets back after that.

26:23 To Nashville. And her radio station cy at this point, so she's kinda proven that she's like You know, she has some credentials of like looks in addition to voice. And uh poise in front of you know people So her radio station colleagues call up the local CBS affiliate in Nashville, W L A C

26:41 And tell them like You gotta hire this girl. Like you gotta she's she's you know, she's her her calling is beyond radio. 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 in all likelihood a white male. And so She always had to do a non traditional thing.

27:09 to give herself a platform and a credential for a reason why she would be the obvious choice over a 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. Uh and she does it in such a way, like, you know, that's not like You could be Super view that as super cunning and conniving and done with poise. Yeah. Like everybody knows it. Like she's she's super upfront. She's like

27:51 I want the star on the hall of fame. Like I wanna own it, you know? So WLAC brings her on, they hire her, she becomes the first black woman on television in Nashville. Um I think in all of Tennessee, but definitely in Nashville. All while she's still in college, by the way. And uh she comes on board as a as a reporter for the for the news. Um so not an anchor, but a but a field reporter. Um turns out among Oprah's many, many great strengths. Being a news reporter, it turns out is not one of them, uh, 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 um You know, nobody sounds like her either. She just talks like she's

28:41 You think of the T V news reporters, you think of like stiff like real bubble. She's relatable, she's authentic, she's powerful. Exactly. Yeah. She's one of the audience. And uh so she ends up the station sees like People love her. She gets promoted to to be an anchor on the evening news. You're not doing so good at being a reporter. You should come be the anchor. Just come be the anchor. Stop this stop this reporting stuff. Very quickly after that, she gets recruit to move uh to Baltimore.

29:10 uh 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 and the r she makes the move is A, Baltimore is 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've seen Anchorman, I'm familiar. If you've seen Anchorman, you know exactly how this works. Uh so Jerry is Will Farrell, basically. Um So Oprah drops out of T S U and makes the move up to up to Baltimore. So she gets there and probably predictably she and Jerry don't uh get along or see eye to eye on uh on the style. I mean, he's like, you know, super old school, Edward Murrow style, like echo the new isn't.

30:05 She's Oprah. And uh that could work great, but in this case it doesn't work super great. So a few months in, she gets demoted. She has a multi year contract uh with the station, so they can't fire her. But um 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 T V, but that doesn't sound good. Yeah, so this the assignments um she gets her stuff like she covers um the cockatoo's birthday party at the zoo.

30:34 Uh like yeah, pretty um Pretty pretty rough. And for somebody as ambitious as 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 media market on the number one station in just like a couple of years.

31:00 Um this is a pretty big blow. But also like you know, Oprah uh 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, weekend features reporters. Every party reporter there is. Exactly. Yeah. Like you know the se and the seeds of the Oprah Winfrey show are sown right there. Um you know, we're joking, but but kinda true. She does that for a couple years and then gets the next big break when Uh the station decides that they're gonna start doing a morning talk show after the news.

31:40 They're inspired by Phil Donahue, who's been around for many years at this point, but is taking off Phil. From how he's from Cleveland, actually, originally is where 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

31:59 A major phenomenon. Like this whole new category, you know. The daytime talk show. That was not a thing until Donahue. It's not a thing. It was like so what it used to be before Donahue was you had the morning News. And then during the day you had just all the you know. uh syndicated like wheel of fortune, like game shows. Uh Donahue has this great quote in um uh in the WBZ podcast uh with Jen White, uh I can't remember exactly what he says, but it's like, you know, he's kind of making fun of it. You know, it was all like come on down and click, click, click and you know, whoop de doo. Like that was a spin. Yeah, exactly. That was uh that was daytime

32:35 T V. So he introduces this this talk show format and people love it. Um And and we should say these these daytime T V syndicated game shows had massive audience. Like those things were cash cows when they got syndicated. And I think Uh uh 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 prices right started, but uh that kind of stuff. But I think it was it wasn't that this stuff was like that compelling. It was just that like

33:08 A lot of people, particularly suburban housewives, watch T V during the day. They were gonna watch whatever was on. This was what was on. It wasn't that it was good. Uh and so when Donahue 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.

33:24 And the thing you just said there, David, I think is really important to drill home for everyone, like We live in a pretty male dominated work culture and society now. than, you know, in the seventies, like Yeah.

33:37 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 what's super interesting to pull forward a bit is That was true. But also there are a lot of jobs, there are a lot of places

34:02 that were workplaces where there were men and women that had TVs on during the day. Like uh think about like, you know the auto mechanic shop or like um you know anyway you name it a seven eleven like I remember not too much after this time, uh, 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 did Westchester, Pennsylvania, and during the summers they'd 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 nineties?

34:46 Yeah, this would have been no, this would have been even earlier, like uh late eighties, uh, early nineties. Dude, I'm so funny. I was gonna say, uh aside from our story, but I was gonna say I've never actually watched an episode of 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,'cause she was a huge I think my grandma may have watched every episode. Or through headlines and like th through the things you know about Oprah because they were major pop culture moments, but like I I feel like we have way more credibility now that you've actually watching the show. I grew up watching a lot of Oprah in the summers.

35:23 And uh out of all these shows, Mori, 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 TikTok and everything is like Everybody wants to watch something during the day. No matter what you're doing. All right, listeners, now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture.

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37:23 And just tell them. That Ben and David sent you. So what was Donahue doing? What was his show? So so that's what so what Donahue was doing was Covering subjects in a talk show format, an interview talk show format.

37:37 Uh that were he and his producers, who are 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 uh 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?

38:09 Yep. Totally. Well, celebrity guests and um I think He had the first uh I believe this is right. I think he had the first uh openly gay person on T V to like talk about.

38:21 Being gay. Uh you know, this is like we're talking this happened in the sixties. 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 mo like out of morning news, right? Like Donna Hugh Donahue's show was um an AM, like a ten AM or eleven AM show, right? Yep, it was to follow the news. Got it.

38:42 Uh so the idea was, you know, again, we're in sixties America, like dad goes to work. Kids go to school, mom is now watching. T V. That was the that was the idea for Uh Donahue. So anyway, it it took off in Baltimore.

38:57 the the station decides, hey, we should we should also lots of local stations were saying we need our own morning talk show. So they started decide 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 should be Like a a YouTube TikTok channel. 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 that is what being a star means. That's the like the definition of The top and she's like, What is this? I don't know, daytime TV. You guys already shoved me over to the covering zoos. Like what are you putting me on now? You're trying to, you know, push me even lower on the totem pole. But they convince her to do it.

39:45 So she does it and like she does the first show and she's like 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.

39:59 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 the you know, this starts to get notice in in the media world and eventually people are talking gets a deal for national syndication. And the idea is it's gonna go up and compete against Donahue, but it only gets into seventeen markets and it kinda flops nationally. I don't know exactly why. I don't know if it was maybe like too parochial to to Baltimore or just what.

40:34 But it doesn't work and and the syndication deal gets Canceled. 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 the biggest syndicator at this point in time is a company called King World. And I don't know if people are talking with syndicated through King World or or another company, but basically these groups of which King World is the largest

41:01 are just media rights distribution companies. So they would go around pickup shows, which all shows at this point in time were being produced locally by local T V stations in any given market around the country. pick up shows that they thought had potential. And then do a licensing deal with them.

41:20 to then re resyndicate 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 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 of Fortune, they had Jeopardy, you know, all these shows. Now what's interesting is is um This seems so crazy today. I didn't even realize this growing up, but the you think of, you know, your local TV station like um 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 A B C there's NBC, the big broadcast networks. Those stations are

42:08 independent businesses They affiliate with the big broadcast networks, but that's really essentially only for prime time. T V you kinda Uh seven PM to ten.

42:22 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 Kingworld to bring in syndicated shows. So all this is happening outside of ABC, MBC, 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 tended to start, was either in a Rev share or profit sharing deal. So they would come to you, they would say, Um, right now you're only getting to address Baltimore. Do you want we think you could play in these seventeen markets. Um, we're gonna take some cut.

43:09 And and I think the cuts vary wildly, so I don't I can't describe the prototypical deal, but w we're gonna take some cut of the Ad dollars that come in from whatever those T V 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 uh station who owns the rights to a show, you're like, great, it's all upside. Like anything additional you can get is is new marginal revenue. It doesn't cost me anything. Take whatever percentage you feel you need. And of course it's not that that cordial, but the you can see why there's these revenue share or profit share agreements

43:46 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 Ben, you may know the um detailed economics of these types of arrangements better than me, but I think it's kinda inspired by and very similar to like the book publishing industry. Another industry we're gonna bring up in a minute where the author writes a book, that's a fixed cost investment uh 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.

44:20 uh 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, the syndication sort of evolves into uh 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 the 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

45:02 already the incentives of a syndicator are to lock in a deal as long as possible at the most favorable economics, and the the incentives of a creator are either to get as much up front as possible in in sort of an advance or Or to make the deal as short as possible. So that if it if you start to get leverage um by being really popular, then you can go back to your syndicator and go, You need me more than I need you. And we'll see how that's how it plays out. Specifically keep the rights to your content. So That'll come in one second. So okay, all this is going on

45:36 Even though uh people are talking fails on national syndication, you know, Oprah's still a big star in in Baltimore, then in nineteen eighty three is when the big, big, big break comes. So One of the producers on uh at the station in Baltimore and and on People I't Talking is a woman named was a woman named Debbie DeMaio. And Debbie had moved to Chicago a little bit earlier and join The local ABC affiliate in Chicago, WLS. Which was owned by Capital cities, which will make all longtime acquired listeners and uh capital allocation fans smile. Oh, yeah. And so so Debbie's a producer now. If you're digging these seventies TV references, go listen to the ESPN episode, because I think we probably did a a much deeper dive on how the industry dynamics of that worked then. Yep. Debbie's now working uh at WLS in Chicago.

46:24 And they have their own morning talk show, AM Chicago. Uh and one of the co hosts, they have two co hosts, one of the co hosts uh leaves. And Debbie goes to her boss and says You gotta get Oprah out here. Like Oprah's ready for a bigger stage. Uh Oprah's gonna be the perfect show. She's gonna be perfect for Chicago.

46:44 We gotta lure her away from Baltimore. So At the time the station had a new boss, uh, who is Debbie's boss. A man named Dennis Swanson. He was there because uh WLS had been kinda in the dumps. It was like I think it was lowest among all the local affiliates uh in ratings in uh in Chicago.

47:06 And he had been installed by Capital Cities, which owned the station. To fix it. And uh of course Capital City is run by Tom Murphy and Dan Burke, master capital allocators. Warren Buffett calls them the uh the greatest uh Greatest operating duo of of all time, I think. Yeah, and famously very decentralized. So install someone

47:26 Let them run the T V station, we'll get out of their way. Yep. Okay, so Dennis is new. He's there to fix it. And uh he says yeah, he hears Debbie's pitch, he says, Okay, great, like Let'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

47:43 Uh we'll watch her do a show and And we'll see. So 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 the street. Yeah, it'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, Donahue 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 Donahue and then being syndicated nationally. So he's he's there across the street.

48:19 And he's like, This is how we're gonna beat Donahue. We're not gonna out Donahue Donahue. 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. Two hundred thousand dollar salary, way more than she's making in Baltimore. uh says you gotta do it. I want you to I want you to start now. And uh and famously over says Well do you have any Concerns. Dennis says no. She says

48:47 You know I'm black. And Dennis says, Yeah, I can see that. Uh and uh 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.

49:08 So she's like oh Okay. Uh so she signs the deal. Dennis calls up the capital city's brass and they're like You sure about this one? And he's like, No, no, 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 he was there specifically to fix the station. Um And uh he says no no no trust me, this is gonna work and uh Of course it does. So Oprah makes the move out to Chicago and uh

49:35 They debut the show in January nineteen eighty four. It is Instant success, like literally instant over there. This is this is AM Chicago is the show. AM Chicago is the show. Uh the whole station on the back of this new revitalized AM Chicago with Oprah hosting 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 in his Yeah, it's one thing to out Donahue, Donahue only in Baltimore, but

50:12 I mean to be scoped to one local market and be Donahue's market and out Donahue, Donahue. That's a big deal. Huge, huge deal. So a couple of things happen on the back of this. One uh Tom and Dan at capital cities are like Dennis, job well done. We are gonna promote you. Gets promoted up to ABC because Capital Cities had acquired ABC at this point, Minnow Swallows Whale, uh was the headline that we talked about on the ESPN episode. We're gonna promote you up to to ABC to the national broadcasting part of the business. Uh, 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. Isn't that awesome? Uh and uh Bob writes in um in Ride of a Lifetime uh that uh

51:00 At first when Dennis came, so Dennis was like this outsider from like he's a little bit more than a little bit local channel is the same Dennis. Same Dennis. Uh so he comes in. Bob had been working in A B C sports under Rune Arledge. Dennis comes in and Bob's like super scared. 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 and ABC. And then he meets with Dennis and Dennis is like no don't do that. Like I'm gonna promote 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 c all of Cap Cities, and then of course The Disney merger and You know, all of that.

51:39 Right about it. And Dennis has the magic touch. Totally. Or I suppose like the the he's a good picker. You'd say about it. He's a good identifier of talent, that is for sure. Uh 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 Contrary and bet.

52:03 To bet on Oprah. It it takes probably a lot of guts. He promoted a 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 of his credibility on the line.

52:21 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

52:33 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

52:47 doing something non consensus and by zigging where others are zagging You can be a enormously profitable. Yeah. I mean this was a this was such a classic acquired Pull cars driving towards the cliff, pull the E brake, spin around. Because like the station was in the dumps. And one approach to fixing it could have been like, Okay, well, we're gonna, you know, do operational efficiency, which you 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, Phil Donahue across the street.

53:20 I'm gonna bring in, you know, this supernaga. 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 Donahue in like a week. Uh it's crazy. So the other thing that happens, so Debbie DeMayo becomes gets promoted to be executive producer of the show. They expand the show from thirty minutes uh AM Chicago to sixty minutes a full hour. They rename it. to the Oprah Winfrey show. Let's be let's be honest about what this is what the draw is here. Kind of on the back of all this Oprah.

53:56 says, You know what I I need a I need a new agent. I need like a real uh a real agent here. I forget who her agent was before. Here's the story here, and this is from a great Forbes article. So WLS had been paying Oprah two thirty a year, so she got two thirty that first year, and then it was gonna go up by thirty 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 Uh and that didn't make sense to me. Why were people going out of their way to praise the fellow?

54:32 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. Uh, I didn't find that. That is amazing. It's a great observation. Like if people Who you were just negotiating against or are

54:54 Praising your agent. Like You got had. Yeah. You need a new agent. Oh man. So great. Well, Jeff, um

55:03 Mm. Jeff and Oprah would be business partners for about twenty years. he both negotiates a much, much, much better deal for her and brings her into national syndication and everything. But two things happen in the in the next year or so that And where are we? This is nineteen eighty. This is nineteen eighty four. Ninete four, eighty five. And uh that completely changed Oprah's mindset about

55:26 what her goals are. Uh so Jeff when he comes on board He He says like look, I'm I'm gonna get you A much better deal with you know much better b salary with with WLS and all that and like you know, great, we'll do we'll do good. But

55:41 And he and he does. It was like a hundred times more. Like his he was getting her first year salary into like thirty million. Category. Sorry. So I think I I don't know exactly what it was with um Uh when she was just when it was just AM Chicago, but

55:58 Certainly more. So he convinces her, like you gotta 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 is a quote from him. Don't be talent for hire. 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

56:28 Alice Walker's novel The Color Purple. is being made into A huge Film Event.

56:35 With Steven Spielberg as the director. And he's going through casting and Quincy Jones. is signed on to the project as a producer and is doing the music. And

56:47 Quincy tells you. Steven. Hey. You might want to look into this uh this rising star. This rising star TV personality in Chicago

56:57 Who I think would be perfect to play. Sophia. Uh in the movie. And so Spielberg meets Oprah, of course. Rest is history there. Snapchall says 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.

57:24 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 that Jacobs 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 Boulevard, but literally I'm gonna own the Boulevard. Like that's how you make the real money and get the real power.

57:49 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 wade 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 th 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. Uh and it actually reminds me of another episode we did, David, with uh uh recode when we had Kara Swisher on, you know, Kara talked about how

58:29 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. Um, 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 the band with her and um 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. Uh and it certainly carries much more risk than like a guaranteed salary payment from whatever big media company, but Um

59:08 You know well, as we'll see with Oprah, I think she's Very glad she took this path. And and not to mention you need demonstrated success in order to pull this off in your negotiation,'cause 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 who you remember uh people are talking back in Baltimore failed on national syndication. Well, you know, they're they're not blind to what's happening in Chicago now. So they come to WLS and uh Oprah and they say

59:44 Hey. Wait, we're gonna take this we're gonna take the Oprah Winfrey show. National. syndicated in a big way. Not seventeen markets, a hundred and thirty eight. markets. And did she only do the Oprah Winfrey show for one season in Chicago before King World was like, and time to go national. The first national show was September nineteen eighty six. So I think it was two years. Two seasons in

1:00:08 Uh, I don't know if it was AM Chicago. It was probably maybe one season 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 uh the color purple, tells Spielberg, Hey, I gotta go negotiate 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, nineteen eighty five. It's huge. Gets eleven Academy Award nominations. Oprah's going on all the she's going on the Tonight Show. She's getting magazine covers. She's promoting

1:00:39 The Film. But she's also promoting her na 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 uh September.

1:00:54 Eighth. Nineteen ninety nineteen eighty six. The first a national show. is uh is broadcast. Um or actually well before that I I can't remember if it was before or after. She does an interview with uh Bill Zemi, uh which was

1:01:08 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 lasts 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 used the word mogul in the intro, I was like, Oh, is it fair to call you know, would she like that? I didn't realize she actually used the word.

1:01:43 So she's pressing the advantage. September eighth, nineteen eighty six, the first national So First national Oprah Wentry show. airs and hundred and thirty eight markets. And on the WBE Z podcast, uh I think it's Debbie DeMayo tells the story of they tried to get Don Johnson from Miami Vice as uh as the guest couldn't get him. But couldn't get him was so amazing. Yeah. If only they had Yeah, this is on that great podcast that David mentioned at the top of the show.

1:02:09 th th there's a great discussion of sort of the culture of the Oprah Winfrey show at this point. Like It's effectively four 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

1:02:44 On the one hand, you're like they're in a hundred and eighty uh thirty eight markets. How can they possibly not get Don Johnson to come on the show? I mean, They're just hustlers and they ha 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

1:03:05 Aim for the mogul mindset. That's the second piece. I think the third piece of 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 Kent, who'd written a book called How to Marry the Man of Your Choice. Uh and I'm gonna read or I'm gonna read in a sec the verbatim opera's opening, cold opening to the first national show. But keep in mind, uh, as I'm saying this, like W what Oprah is and 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. And yeah, she screams at it. It's 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 premier show that it's enough to

1:03:52 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

1:04:22 Market. And like Okay, so just like think about that. Like the the W B Z Podcast talks about this. The target audience is Suzy. 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 Suzy. And like had that as a persona that they would like to check 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 producer's room for Susie. Like what does Susie wanna 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 does susie relate to? What is susie, what are the questions susie wants to ask? And like

1:05:02 Compare that opening from Oprah to to Donahue, to the evening news, to anything that's to know the wheel of fortune, anything that's on T V right now. Susie's their friend. Like you know. It it's just so unbelievably authentic. Like it's so different than in what you're hearing on TV and it th that'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 nineteen eighty eight

1:05:39 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 uh sixty seven pounds on a diet. Um she did it with a product called Optifast.

1:06:03 Did she talk about it on the show. Mostly the fasting and when she occasionally did eat, it was optifasting. Yeah, exactly. Uh super not healthy. We'll talk about all that in a sec. But it was crazy. Like literally forty four million people watched this show. Uh and then the like the the uh big um you know, over the top moment in the show was uh halfway through she brings out a wagon with sixty seven pounds of animal fat on it to say, like this is I was carrying this around like You know, it's I mean 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 celebrating like

1:06:40 I just went on this diet. I lost all this weight, like that. Right, here I am in my size ten genes. I feel like feeling so good. You know, I want to celebrate you with my friends. Yeah. And uh forty four million people watched it. So crazy. So so crazy. So she starts, you know, they they start getting letters from people from all And by the way, that's a live number. Like Yeah. Like let's not there was no D VR, there was no YouTube, so like forty four million people

1:07:06 Tuned in during that hour. to watch that concurrently. It's like nowadays, like you know, probably the Tom Cruise Jumping on the Couch clip has over forty four million views, I would guess, on YouTube these days, but like that's over fifteen years. This is forty four million people. Think about Amer uh what does what does America have population wise at that point, maybe like three hundred and twenty million people. Oh Like less than three hundred at that point. Yeah, so

1:07:33 What is that? Like uh one probably fifth or six of America. The US tuned in to watch that episode. Simultaneously. Un unbelievable. Um

1:07:45 And like this isn't the Super Bowl. This is a daytime talk show about a woman who lost weight. Like But And it by nineteen eighty eight, it wasn't just a woman who lost weight, it was our Oprah. It was like it was it was our person and this

1:08:00 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

1:08:09 Obviously there there's a lot that's problematic and like Terrible and like uh gawkish 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. Um Well let's let's touch on that now,'cause I think uh Oprah has some uh quotes looking back on this that are worth mentioning. And the the top one is I actually thought at that time that being thin made me better.

1:08:32 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. 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

1:09:00 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.

1:09:16 She gave them, as she says, on a platter. And it's a tough thing to to tie sort of your uh self worth in in your physical appearance like that. And I think You know, that this is young Oprah sort of flexing it 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, wiser Oprah later looks back and is just clearly so bummed that

1:09:43 that she opened up in that particular way. Yeah. But A hundred percent. Honest too. I mean Oprah

1:09:52 As I think we've hopefully described here is like An exceedingly Uh once in a generation sharp uh media business woman. Uh 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.

1:10:09 While certainly painful and all that, like she just guaranteed the next twenty years of headlines about about Oprah's weight. Again, super terrible and problematic in lots of ways, but Oprah's in the headlines. She Oprah knows what will play. Yeah. Um So on the back of that, yeah, well actually it was a little before in Nineteen eighty seven, I believe, was the last year of the original contract with King World. Uh I think it was originally a two year contract. Or maybe it was a three year and it went into eighty eight, but they negotiated in in eighty seven. She earns thirty one million dollars in royalties and salary from uh the King World contract in nineteen eighty seven. And that's when she and Jacobs decide, all right, it's time to put the mogul plan.

1:10:53 Into action. Yeah,'cause I mean think about when she was just employed by the station, she was making two hundred K, then she got I don't know how much more, but hundreds of thousands of dollars more with a better agent. Um when it was still just the station. The syndication deal, obviously, that's when you get those one, maybe even two orders of magnitude, um uh jump into this thirty one million that year. from being in a hundred and however many markets. So what next?

1:11:20 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 Wentfree show, or at least the rates to it. They negotiate directly with King World.

1:11:37 They Invest sixteen 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.

1:11:51 more uh media content too and they're gonna sell it. sixteen million dollars of 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 thirty million, but she just knows the trajectory that she's on. So she's like, you know what? Let's throw 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.

1:12:16 Harpo Media. So HARPO of course is Oprah, both Oprah backwards. And the uh uh husband of Sophia's character in uh And so they found Harpo Media and Oprah owns eighty percent of it. Jacobs owns ten percent, and Kingworld gets an equity stake of ten percent as well as part of this.

1:12:36 negotiation. And in doing so, Oprah becomes the first black woman and only the third woman ever to own a production studio. So like again, 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 is the first woman that is solely independently doing this. First black woman, period. There's no board. Oprah controls everything. And

1:13:06 Again, th they start Pumping out other content. So first other project besides The Oprah Winfrey Show. It's called The Women of Brewster Place and it's a made for TV movie. They had they know their audience, right? And so uh kind of just like the you know Dennison um you know back in the day, the original like having an inkling that this is gonna work. They have an inkling that a made for TV movie targeted at 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. Uh the networks don't want it.

1:13:36 Oprah basically forces ABC'cause he has this relationship with A B C in Cap Cities. I think Bob Iger might have been running ABC Entertainment at this point. So basically forces Bob to uh if he was They run it kinda like, all right, we're doing this to appease Oprah. It becomes the second highest rated TV movie ever. So like massive turns out made for TV movie, like uh I don't know how many people watch um the Hallmark channel, like it's a good idea or the or own Oprah. Or lifetime. Or lifetime 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.

1:14:19 Um, she knows America as an audience and we're gonna keep touching on control, we're gonna keep touching on um her drive to be big, but there's this th she obviously has this gift of how to speak to people, but she has a real gift f for just knowing what will land and how big it will be. Yep. So okay, so this is the first one. So what did it what does she do then to build on that? What does she know is 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. Uh she writes an autobiography. And by all accounts, she actually wrote this autobiography. And she had a deal with uh Knopf the publishing house to publish it.

1:15:09 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 her than like if she had actually published it. It was the most anticipated Book of like the century. And then she didn't publish it, which just made the myth even Straight.

1:15:30 And so then as a consolation prize, she says to Kanoff, Okay, well, like I didn't do this, but I'll do a cookbook with you. And um so she they publish Yeah, book called In the Kitchen with Rosie. Rosie was her personal chef. Um I'm pretty sure it becomes the fastest and biggest selling cookbook. Of all time. Um Amazing. And it's especially amazing because Oprah's not even like her brand around that point isn't even like I know food. Like there's no Like it it just happens to be that

1:16:00 Well, there is the whole diet thing and like, you know, she's had the I think she has the tie in with Weight Watchers at this point. Right, right, right. But their whole like Rachel Ray relationship hadn't begun yet, right? That hadn't that hadn't begun yet. Um So then I think it was one of our producers, Alice McGee, comes up with the idea in nineteen ninety six, a few years later, of Well, okay, so this cookbook thing works and she's always had authors on the show and

1:16:25 Um she recommends their books. It 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'll be. Yeah. Exactly. Oh God. Let's not go there. Um, then it was gonna be the best selling too. You had to. They had the idea. On the show. Well what if we launch? A book club. So in September nineteen ninety six, they launched Oprah's Book Club with Tony Morrison's Song of Solomon as the first book. Uh, and the idea is they're gonna

1:17:03 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 a hundred and thirty million dollars in book sales in literary fiction in nineteen ninety six, which is many more times sales than the entire genre category had had like in the years before. Uh just like Um

1:17:27 Such a brilliant Business idea. So Pause. Announcement for the L P program. This is our big reveal.

1:17:34 We're gonna launch the acquired book club. Uh so it's gonna be part of the L P program. The first book is gonna be Hamilton Helmer's Seven Powers, of course. We already have the episode with the author done. It's 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 a in 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. Well, we'll talk about that in Playbook. But um

1:18:06 Yeah, acquired book club. Uh it's happening. So Here is how it's gonna work. Ben and I are gonna choose a book. Time interval T B D 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 L P episode with the author.

1:18:28 Discuss the book. And a LP Zoom discussion, uh 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 Ben and my notes on the book. Our notes on Seven Powers are already Ready to go as soon as we figure out the right uh Vehicle to get that out to everyone.

1:18:52 Exactly. Exactly. And then then mentioned the book club channel in Slack that has been sitting there for a while. We're gonna repurpose that for use of uh ongoing discussion of our Book club books.

1:19:05 Yes, we are very excited to uh 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. Uh pick that up and uh 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 uh 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 one hundred LP subscribers. We also know that lots of you have been LPs for a long time, and so uh we are also going to go back through and pick one hundred 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 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 we'll send you a digital copy. So we're excited and uh we hope you'll join us. Yeah, we hope you will.

1:20:04 All right listeners. Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team, and deploying them is uh no longer the hard part. Yeah. The hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making. AI security for an enterprise at scale is not a small concern. Like the risks

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1:21:42 So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely, at scale. Go check out service now.com slash acquired and tell'em that Ben and David sent you. Okay. Back to the regularly scheduled show in progress. The other thing that they launch in 1996, maybe th this is future acquired. Maybe come Christmas time around Thanksgiving, we'll do this. is Oprah's favorite things. Oh my God. So I did not realize. Did you know, Ben, that um

1:22:10 Remember Uggs Boots? The furry. That Oprah was the queen maker of that. Oprah made Uggs. She I like she had some Ugs, she loved them, and then that year so the by by the way, the way that Oprah's favorite things work, I think it's the first episode of each season. I think it was the Oprah's favorite things. I think they switched around when they did it. Sometimes they did it around Thanksgiving, right before Christmas shopping. Sometimes it was September with the first episode of the season. Um the car giveaway was not random. Like it was part of a series of things that she started where it was like

1:22:44 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 to the 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, th this got dubbed the Oprah effect, the combination of this and the book club. uh 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

1:23:18 She did seventy books over the fifteen years of uh of doing this. So the the fifteen of the twenty five years of the show. In total, there were fifty-five million copies sold after Oprah recommended it. So I 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 bestseller. 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 a lot of sort of analysts have sort of uh worked it out is w when Oprah decides to endorse something, that increases the number of people who will do that thing by a million.

1:24:04 The uh going back to the cookbook with Kenop, the uh I I don't remember the exact numbers, but the story is they were like, Yeah, we're gonna print like fifty thousand copies or something like or hundred thousand copies. And if it was like W that's not enough. That's crazy. And then they're like, Well we know we printed

1:24:21 The Juliet Allen cookbook, and that's only ever sold three hundred thousand copies or something. You know, if I said, Yeah, you're you're gonna have to ten X your production on this. This is a good a place as 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 Uh at this time that we're currently in in the story in the early nineties

1:24:44 Oprah would draw twelve to thirteen million concurrent viewers every single day. to her four PM show. Astounding. That's like five percent of America at that point in time. Yeah. And if you look at

1:24:58 Over the course of a week, the number of unique viewers who would turn it tune into one of her show would be forty to fifty million. So her audience, her weekly effectively weekly active users or weekly audience was Like forty to fifty million people. Now there were spikes, and I will talk about this in a moment, but the like the she interviewed Michael Jackson in a in 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 ninety million viewers.

1:25:29 And at any given time during the broadcast it was sixty two million concurrent. Yeah. Which was I believe it was may it was either the Largest or maybe the topic. Yeah, but I think it was the largest um

1:25:45 It may have been the largest non Superbowl. Television event in history too. Freaking wild. So the the the comparison that I wanna make here just to like r really drive this home is you so the people talk a lot about like

1:26:01 the incredible amount of attention and users and watches and views on YouTube or the incredible amount of people who watch esports or video games Like W let's let's not even take that weekly viewer number of forty to fifty and just look at the sort of like concurrence on a single show on an average weekday at four PM. So like Thirteen million people. the largest concurrent number on Twitch ever has been when Drake and Ninja played Fortnite, and that was seven hundred thousand concurrent.

1:26:35 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

1:27:01 The way that we were in this syndication era, so w 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 c 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 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.

1:27:29 In many ways it's so much better. There's so many more opportunities. There's Twitch, there's YouTube, there's TikTok, there's Twitter, there's podcasts, there's everything. Um, there's blogs, there's email newsletters, Oprah. only had uh appointment television. But Because of that, there's also such a cacophony 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 Donahue and all the but like, you know

1:27:54 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. Doctor Phil, Rachel Ray, Doctor Oz. These all become Harpo productions. Yeah. There's no one

1:28:10 thing that you can attribute it to, but certainly a driving factor in what helped 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 wade 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 twenty five year friendship that she wanted to have with

1:28:43 Frankly, the women of America. And uh uh uh uh 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

1:28:59 It's all the things that Oprah didn't do and the thing she said no to and 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.

1:29:11 So In nineteen ninety nine. Couple of things happen in nineteen ninety nine, two thousand. Oprah renews its time it's up for renegotiation renewal for Harpo and the and the King World deal. They renew it for one hundred and thirty million a year.

1:29:26 Or what works out to a hundred thirty million a year with in the in the revenue sharing. Plus. Now Harpo gets equity in Kingworld. Remember Kingworld got equity in Harpo originally. Harpo gets equity in Kingworld as part of this deal. That year, later that year, CBS acquires Kingworld for two and a half billion dollars.

1:29:44 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 network so Rachel Ray, Doctor Phil, Doctor 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.

1:30:07 And then the next big thing is it launches in two thousand. They partner with Hearst and they launch O magazine becomes the largest, most successful magazine launch in history. Two point five million copy circulation right off the bat brings in a hundred and forty million dollars in circulation plus advertising revenue in the first year. The Empire just keeps on growing. A couple years later, She does a deal with Sirius XM, getting back to the radio routes, does a three year fifty five million dollar contract to bring Oprah and friends uh as a channel.

1:30:42 On serious XM. That was the next piece of the empire. Yeah, this is in 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 men 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.

1:31:26 And you know, you 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 and what different media rights can I own and monetize those. So the we can't not talk about this too. other thing in the mid two thousands that she just nails is like she she just reaches the apex of her powers as the like celebrity confessional and We gotta talk about two thousand five Tom Cruise. Katie Holmes. Uh you seem really just Overcome with love.

1:31:59 This is a whole new Tom. This is a different Tom. Yep. Oh man. Amazing. So fun to watch on YouTube. But that's actually again Oprah to kind of be 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 build up to the wagon of fat, you know, all that kind of stuff. But now it's like we get these moments, get these clips. And then they're gonna be posted and reshare and reposted on the internet.

1:32:28 The rise of Oprah and the dominance of Oprah couldn't have, and fortunatefully 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 Oprah dot com and some more stuff we'll talk at 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.

1:32:55 But The uh like the older episodes. It would be a whole like her most buzzy 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 o 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 one single topic that's

1:33:24 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 Yeah, I mean you can even just pick uh 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 uh you're right. She's she's very adaptable. So kinda, you know On this going out on top, uh so she decides that the twenty fifth 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 sec. In the second to last season of the show, I think this is best Most perfectly encapsulated with um

1:34:04 To kick off the season premiere in the twenty fourth season, they have the black eyed peas come to Chicago, do a big outdoor event and they do this when flash mobs, internet flash mobs were a thing. They do a flash mob dance. They do a special version of I Got a Feeling with new lyrics just for Oprah. There's Yeah, like Will I M rewrote the lyrics to the song. At least in the first verse. Yep. And they get, you know, twenty, thirty thousand people. To come uh to Miracle Mile in Chicago. They close down the streets, they do this thing. And then Everybody does a choreographed flash dance in the middle of it and it's like the most perfect three minute YouTube uh thing you could ever. We'll link it in the show notes. Oprah doesn't know. It's incredible. She is somehow they they told thirty thousand people something that in Chicago that Oprah didn't know. And they actually pulled off

1:34:52 Like shocking her. The most telling quote that she has is, you know, when they do close down the streets of 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 uh her producers are like

1:35:10 looking back and Yeah, I I think they are. And it's just because she doesn't actually know w what the real reason for closing it down. It's it's it's very cool. Well the irony is Yeah the black eyed peas maybe Oprah is definitely big enough to close down the um the show ends and its twenty fifth season in twenty ten. They do a two part finale. They have, you know, everybody Everybody who's anybody who's part of it. Will Smith, Madonna, Michael Jordan, Tom Hanks, Tom Curry's of course is back. Sans Katie Holmes, I think, at this point. And uh as part of it. Aretha Franklin.

1:35:46 Makes it back all those years after the Hundred dollar bill given out the windows thing's amazing grace. In the uh uh I think it was the last episode was just Oprah in the studio, but uh the second election. Yeah, and uh Pretty amazing. Um So that's the wrap on Oprah the media personality.

1:36:07 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 MBC Universal in two thousand seven. I assume with some of the proceeds from that. She then

1:36:21 does a deal with Discovery in two thousand eight, 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 fifty-fifty 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, fifty-fifty JV with Discovery. And I believe in 2017, I think Discovery bought out half of Oprah's stake, so they now own about like seventy three, seventy four percent. And uh Harpo owns the rest The plan is they're gonna launch in January twenty eleven.

1:36:51 because the King World CBS distribution rates for the Oprah Winfrey ran through May twenty eleven. So they're gonna launch in January and then by the second half of the year they'll be able to be running reruns of the Oprah Winfrey show, uh, along with Dr. Phil and Rachel Ray and everything. The channel actually struggles for a couple years after they launch it, but then, you know, again, like Oprah Hartfo, like they're tuned in. Yeah. And let's talk about the channel struggling,'cause 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.

1:37:24 But she didn't actually it's not like she had email addresses or phone numbers for'em. They watched channels that she was on. And when she'd moved over to a new channel, like a Joe Rogan or, you know, a lot of the like we're seeing it unfold in podcasting now, like She doesn't necessarily have an 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 t has talked about this, she underestimated the power of habit. They were used to turning on A B C at four PM and just kinda seeing her. Channel six, whatever, yep. Yeah. Yeah. That's such a good point. I hadn't thought about that. That's such a good point. The other problem is is

1:38:00 Yeah, they've got the upper. Reruns, but There's no new Oprah show, right? Like there's no reason to to tune in. Um But in twenty twelve. They sign

1:38:10 A production DL HAPO does with Tyler Perry. To Bring over some of his existing T V series that he's been working on and also produced some new T V series for own

1:38:22 And own is the Oprah Win Free Network. The Oprah Win Free Network, yep. With rebranded Discovery Health. And that I think kinda saves the network. So Um The haves and the have nots, Tyler Perry's the haves and have nots, uh become a huge hit.

1:38:37 Along with other other series that both were existing come over and new ones are Loving You Is Wrong, The Pains for Better or Worse. His empire and and that kind of content, uh, starts you know a whole new generation of of folks watching uh watching Own. This is still starting to play out, but the uh the final Ultimate media mogul moment. Which we're gonna smile and laugh about here. Is uh Oprah

1:39:05 makes it on stage at an Apple keynote event. Does possibly the worst Apple keynote of all time. Possibly the worst. What 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 twenty eighteen. But she entered into a Harpo entered into a unique quote unquote unique multi year content partnership with Apple. That would consist of the idea was they're gonna bring back Oprah's book club uh as part of iBooks. Yeah.

1:39:34 It is an Oprah's book club on Oprah.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 they're also gonna be Oprah. Interviews on on Apple TV plus. She was gonna conduct interviews. So um that has been part of it, uh I don't think that partnership has played out as as intended with the year and a half. Yeah. The the other thing is like that that would have to be a special carve out because uh she is under exclusive

1:40:03 on screen her her on screen appearance, I think at And maybe it's only for terrestrial Like, Not streaming. But yeah, she's exclusively on screen.

1:40:15 with the Oprah Winfrey Network as part of the discovery relationship. Yeah. Yeah. To kinda wrap it up here in the history and packs, you know Oprah Oprah achieved her goal. So today Forbes ranks Opra Oprah as the Sixth wealthiest black person in the world.

1:40:33 The wealthiest Black woman. And the tenth wealthiest Self made woman. Um

1:40:39 in the world. And the crazy thing is we'll get into this in a sec, but I I I think the way Forbes values her wealth is dramatically undervaluing her. Um so I suspect it's actually a lot higher than that. So there's an interesting thing where in two thousand nine, um, it was estimated that she was worth two point three billion, and it's sort of easy to get to understand how she got there. where she basically had this ramp from making thirty five million in nineteen eighty eight all the way up to making like two hundred plus million dollars a year by two thousand eight. And you know, that was just every time she got to renegotiate a deal, a little bit more in her favor, her audience continued to grow until it plateaued in the late nineties, but then she sort of got better and better terms each time, all the way until the show ended.

1:41:20 And so we can sort of see like well it's that's kinda easy to understand how she slash Harpo accumulated over two billion dollars. What's not as clear is uh in all these deals that she's doing now, a lot uh almost all of them are are um impossible to know the terms other than the discovery deal. And so in the last ten years, like you don't really know and Forbes certainly doesn't know Exactly.

1:41:46 How to estimate Harpo's enterprise value, for um Oprah's net worth. So we're still sort of in this same mid twos number that anyone's guessing at. I think we saw in the methodology for Forbes. They said they added up all the After tax. profit cash flow to Oprah that they suspect that they estimate Oprah had gotten from Harpo over the last, you know, twenty, thirty years.

1:42:11 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 are all these properties now that Harpo Uh. has their hands in, including a massive cable network of which they own twenty five percent.

1:42:30 Also in twenty fifteen, Weight Watchers, the company, was struggling. Did you find this, Ben? Yeah. Yeah. She bought didn't Oprah buy Ten percent when the when it was really struggling at at nice terms. Like thirty 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 sh 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 thirty million dollars for five years ago.

1:43:01 We don't have the time to do the uh investment banking style, some of the parts, uh valuation analysis on Harpo and the Oprah Empire, but um 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 Yeah. uh affiliated Disney saga because of all the ABC and Cap City's connections here. But when we're talking about, you know, the Marvel deal, the Lucasfilm deal, the Pixar deal, all these companies that Disney bought.

1:43:33 If Disney were to buy Harpo, and that is not a crazy idea that Disney should buy Harpo at some point, especially as Brot. 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 I L M.

1:43:51 Uh for what you're doing. Yeah, no new films in development. Yeah. For just the IP. Three was it, like three point six debt deal billion? Something like that. Something like that. Now look 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. Oh not to mention Dr Phil, Dr. Oz, Rachel Ray, all this stuff.

1:44:19 Right now, like all the old Oprah shows. I don't know. Um Would anybody watch what's the back catalogue 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 I think a lot of people would like to watch the back catalog of the third. There's at least thirty or forty episodes that must still get a lot of views. Yeah.

1:44:43 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

1:45:07 Many billions more than two and a half billion dollar deal if Disney or somebody else comes along and buys Har Harpo. Yeah, some other interesting as we tie up our sort of history and facts here are Oprah by the Numbers. Uh stats here. The over the twenty five seasons. They the show received over twenty million letters.

1:45:27 So like lots of different ways to gauge f fandom here, but like twenty million and they're not you know, this is like page views, not unique users, but like twenty 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 fifty 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 were super fans. Yeah.

1:45:56 I mean Twenty million. YouTube comments would be a lot. Imagine th like the barrier to actually like writing a letter and mailing it. Like Yeah.

1:46:07 Yeah, it's crazy. Yeah, she had reach, but like She had really intense, intense fandom at that point.

1:46:18 And still today. The other place I want to take this that we didn't touch in history and facts, and I just wanna plant a little seed with people. So Oprah Based on her ability to compel people

1:46:30 You know not Through strong. you know, I 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 buy the pajamas Well she at some point said uh You know, this person Barack Obama is truly inspiring to me.

1:46:50 There are many research analysts who say that uh he got a million votes in 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 um from the the two thousand eight election. Um, 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 have. Then Well that a that is a whole nother podcast uh worth of content for

1:47:25 Another show I've has to, but but just as an example that a small one. Oh, Brad never had political guests on her show before the two thousand election. And then she had both been in the first time. In which case she gave equal air time. One episode did Bush and Gore. One episode to Bush and Gore. Before those episodes, Gore was leading Bush by ten points in the polls. And They came on, Gore did like

1:47:46 Fine was kind of stiff. Bush comes on and he like gives Oprah a big kiss. He gives pralines to like the whole audience. Like he he crushed it. Like he did great. Eleven point swing Bush goes from ten 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 uh if that was a good use of capital. The transaction that we're going to analyze here is Oprah spending the sixteen million of her own money.

1:48:25 to buy out the rights to produce her own show and and own everything outright, of course, with the ten percent for King World and the 10% for um 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 tweak on category in honor of our Book Club and Hamilton Elmer and Seven Powers is let's talk about what's the what's the power for Oprah and Harpo? Like what's the defensibility

1:49:03 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

1:49:16 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

1:49:30 continuing to monetize a relationship between Oprah the human And A third of America or ha 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.

1:49:48 But they're still Oprah. Brand kind of. 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

1:50:04 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 uh clearly Walt Disney doesn't need to be alive for

1:50:19 Um you know, 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 can so it's a 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 let's take m 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 Promised Land, my ranch in uh by the way, promised land I can't resist. In Montecito.

1:50:54 is one of if not the probably like top five or ten highest valued real estate properties in the world. It has a five mile long driveway. Uh 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 estate um nearby. More modest estate, I mean.

1:51:20 Yeah. Understatement of the century. What's interesting and With what Harpo and Oprah and with Own and this the the discovery deal I've done in the last since ending the show is I actually think it's a lot more viable that

1:51:36 the value of Harpo continues without Oprah being actively involved now, then that would have been ten years ago. Because Mm. L let's just look at Own, the network.

1:51:46 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 there's more in that. I haven't spent enough time with Oh the magazine to know how much of it is Oprah these days for the Unlike the Oprah Winfrey show where you did. Yeah. It has good circulation for a magazine, but it's you know, de minimis relative to like modern internet properties.

1:52:09 So I guess what I'm gonna say here is if I was to apply uh Hamilton Helmer power, I guess it would be a cornered resource where Oprah is a 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 lot less without her. Yeah. I think that's probably true. Interestingly though, I I was also gonna say cornered resource. I think back pre this era, in the older era of

1:52:34 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. uh that were a cornered resource. Because it's not like th there could have been another Oprah out there. There probably were other people who are just as talented as 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.

1:52:58 distribution deals in place that nobody could Yeah. And you bring up this other concept too, David, of like And this exists within influencers today, there's a network w 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.

1:53:29 You just n would never watch that one because you wanna 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 uh the Kardashian Empire, right? With the the Kardashian West Empire now, uh combined. And I don't know, this 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 here 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

1:54:01 Spotify. All right, well we'll talk more about this in in playbook uh 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.

1:54:16 Yeah, you have to imagine there's audience overlap between Dr. Phil, Doctor 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 gotta think Oprah's on our way to, 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.

1:54:47 Okay, let's go to what would have happened otherwise. So like w what if Oprah didn't spend sixteen million and kept working for WLS? Like I mean first of all she just She might have stayed as important in the cultural Zeitgeist.

1:55:05 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

1:55:13 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 Que television. it created cultural problems at the station. So like Sh she talks about how she felt that she needed to bring the Oprah show into its own physical space

1:55:34 Just to Detangle from you know, all the existing incentives that existed for everyone else in the building. Th the easy thing to say is You know, she never would have become the mogul with the power That

1:55:46 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 Uh unintended side effects were Of staying in that in that station. I have to imagine that

1:56:02 If we were to ask Oprah this question, it would be like well no like Everything is so much better in Magdalene. I I can't imagine she regrets that decision. One Iota. 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 the executive producer credit for sure. Right. Exactly. That's just like for getting some extra points on on the deal.

1:56:36 Really, they're just Talent. And Not. Entrepreneurs. Oprah decided to become an entrepreneur.

1:56:43 Okay. Yep. That's a great It's a great way to put it. Yeah. 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 this show, but like

1:56:59 What are the themes that we noticed 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 Uh How many six seventy six cars totaling eight million dollars.

1:57:28 And they were Pontiac G sixes. I don't know when in 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 that She doesn't need to be rich.

1:57:41 She doesn't care about being rich. She loves her audience, so she buys him things. That's not at all what happened. This 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 it took a it took us uh some effort to get'em up from twenty five cars all the way up to the two seventy six 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.

1:58:13 of of sort of sponsored products and Well shoot uh Marquez uh just did um a a sponsored video with Buick, right? Like we didn't give the Buick away, but like he did an unboxing of a Buick, right? And like uh Yeah, that's the legacy of Of Oprah right there.

1:58:31 Right. So I just wanted listeners to know that Oprah didn't actually buy all those Pontiac. That Pontiac did it and uh 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 by eight and have us all still talking about you get a car, you get a car, you get a car. So a legendary ad deal is the way to think about that. And at the end of the day

1:58:56 All those audience members got the cars, you know? Like they still had to pay'cause it was a gift they had to pay taxes on it. 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 here nor there. Okay, for Playbook though, I so I think I want to let's spend a sec and Talk about Okay. Super clear analogy as we've talked about all along between

1:59:16 Oprah being the first influencer now into modern influencers, like we just mentioned Marquez and K B H D and all these YouTubers, and then you've got the Kardashian West Empire out there. You've got George Clooney and Cas Amigos 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 barrier to entry. You can just Throw up a podcast feed, you can throw up a YouTube video, you can jump on TikTok.

1:59:45 You don't have to cut the deals, but you s do 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 have. 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 him. Rise above the noise.

2:00:11 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

2:00:23 now that there are no gatekeepers, there's uh 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 w when you sort of see the influencers emerging from YouTube and going on to more classic mediums, the ability to sort of buy in bulk and have predictable economics is still still beneficial. Yeah. Okay, two two quick things I wanna say. One is th what you talked about with the cars, I just wanna label that as a playbook theme, which is For this type of business, for an influencer business, like monetizing

2:01:03 your product recommendations and a like kinda native advertising. Like this is the first native advertising that happened and like That is a great business model for for this type of business. The other thing About

2:01:17 how this has all evolved with the internet is, you know, Ben Thompson has written about this uh ad nauseum so we won't belabor the point, but is Like Oprah worked and Oprah could be the best. Like She was mainstream. She appealed to

2:01:30 Certainly just about every woman in America, but lots of men too, like like massive big wide lanes. Now You don't have to do that with the internet. You can aggregate a niche audience. So like you can have influencers in business technology like that. Like us. You know, like you can have influencers in Uh I was really hoping to get through this whole thing without you ever labeling us an influencer. Okay. We this this is it, we gotta just stop talking about No, but you're right. Like if you if you think about the ways that influencers monetize, yeah, there's the sort of like native advertising paid placement.

2:02:09 Yeah. there's the notion that you're gonna create really intense fandom within a niche, which she just had a frickin' huge niche, and there weren't a lot of other people competing. So like The niche was women. Yeah. And so, you know, she 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 g good themes. Nobody was ever gonna make a

2:02:39 nationally syndicated um television show about like the business of technology and Nineteen eighty six. Like um But now. The internet. The way that I label this theme is she had the perfect timing where

2:02:53 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.

2:03:05 and have the intense type of fandom that she had Ever again. Um I

2:03:12 The Uh 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 nineteen ninety four economics of the Oprah Winfrey show, where let's see. The show grossed a hundred ninety six million dollars. Harpa was paid a hundred million of that, so we sort of know what the Rev share looked like with King World.

2:03:38 Oprah made seventy-four million of that hundred personally. So already by ninety four, she was making seventy four million dollars a year. Let's pop back up to that gross revenue number, 196 million. Show only costs thirty million to produce. Oh. That's some good EBITDA margins right there. So what is that? It's a eighty five percent

2:03:59 Is that right? Eighty five EBITDA margin? I guess it depends what you say production costs are. If that's a gross margin or if that's a a net margin. But In Either case, an eighty five percent margin is f amazing.

2:04:13 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 watched 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

2:04:37 Holy crap, that's a good business. And so Th 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 costs of the show. This was the whole thesis of technology and software and venture capital.

2:05:00 Up until um people started realizing that oh you can also build tech enabled businesses with lower gross margins in the real world, which of course you can, but it's a very different business than the, you know, this is why the media and technology businesses are so linked is They are zero marginal cost businesses. And when they scale. They just

2:05:20 Create. Beautiful, beautiful businesses and economics. Yeah. Also let me revisit that and say I think this is a gross margin,'cause at the very least the Oprah has to pay herself out and that's gonna eat into the EBITDA margin. 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 a pure software business. Capped fixed costs and potentially unlimited.

2:05:46 Or or zero marginal cost created unlimited upside. Tom Murphy and Dan Burke at Capital Cities were among the first to Realize this. Indeed. Well, I think uh good time to move into value creation and value capture.

2:06:02 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 Lyft episodes. Oprah I I th 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.

2:06:31 It's not like she has kids, so what's she gonna do with all that money? She she's donated a lot to charity. She probably will continue to donate hundreds of millions, if not billions, more but It's actually a an interesting question to say w what will be Oprah's legacy? Yeah. Well it it actually it ties into I hadn't thought about this until Fifteen minutes ago in the show. But

2:06:54 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 Oprah doesn't have any Biological errors right now.

2:07:08 Uh I wish you could designate other airs, but That's eighty percent of Harpo. uh the ownership. Like it needs to go somewhere. So like like Disney needs to buy like somebody needs to buy it or stored it or something. So I think this actually points to At some point in time in the next, you know, years to

2:07:27 Yeah. I think we're gonna see uh Uh Lucasfilm Marvel type. For sure, whether with Disney or somebody else. We almost

2:07:38 Have to. Still doesn't answer the question though of like what does Oprah do with all the money. So we know it's she has not signed the Giving Pledge, I believe, but she did attend the first Giving Pledge dinner. A lot of money over there.

2:07:54 B. And it's interesting'cause like we we we don't take this angle with other companies. Like when we did our Amazon episode, we didn't And on what will Jeff Bezos do with all his money. But like th no other company is so intrinsically tied to a person that we've ever covered. Like it's it's the ownership structure, right? Like Amazon, you know, Amazon's public company is eighty percent not owned by Jeff Bezos. Right.

2:08:17 All right, listeners. Now is a great time to talk about one of our Favorite companies, Statsig. Yes, there is a reason why the best product teams rely on StatSig, whether they are iterating on their core product features or shipping AI powered experiences at scale. Yeah.

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2:09:07 So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com slash acquired to get started. All right, well let's move on to grading. So for again, folks who are newer to the show we basically agreed how good of a use of capital was it for big co to buy little co and compared to everything else they could have done with it.

2:09:29 in this one we're grading, how good of a use of sixteen million dollars was it for Oprah to buy out the rights to a show? Like I don't know if it's an A or an A 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.

2:09:48 Which until a transaction like we just talked about happened. And then once that happens, then we can say, like, okay, sixteen million dollars back in nineteen eighty eight, I think it was, right? What's the IR on that from that point in time to the eighty percent of the value that Oprah realizes from the sale of

2:10:06 Of our bow. If and when that should happen. Yeah. But The bottom line is it's i incredibly hard to find a

2:10:13 better use of sixteen million dollars than she did in nineteen eighty six. Totally. I mean she created a compounding machine with with Harpo. I mean that's that that is what you're trying to do when you're creating businesses a cash flow compounding machine and She's done that and it You know? Got her uh uh got her to the promised land. Literally got her to the promised land. For sure.

2:10:33 Alright, carve outs. Carve outs so mine, uh I have been reading this. Perhaps. We've been in just like eighties, nineties 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 nineties horror. Author.

2:10:52 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 uh an American Lord of the Rings. It like kinda fits The bill. Like it's excellent. I'm uh about two thirds of the way through it. It's like probably eight, nine thousand pages in total. But just like So

2:11:11 So good. It's about Roland the gunslinger and uh 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. Uh, mine's quick and uh it's only gonna be quick because if I say too much it would spoil it.

2:11:31 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 to Reply at all and you like this show, I bet you'd really like that show. Episodes one oh two and one oh three. Long distance parts one and two.

2:11:47 starts with uh the host getting a phone call from a one eight hundred number that he thinks is trying to scam him. And he picks it up and rolls with it. And it goes to a 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 uh have listened to it, I'm sure you're nodding along right now and enjoyed it. And for those who haven't, go check it out. Can't wait. Awesome.

2:12:12 Well we are We are landing the plane and we are bringing it 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

2:12:24 Acquired survey. Uh we do this. probably about 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, we'll we really think you should hit the subscribe button in your podcast player. Uh, or you can go to our website at acquireed.fm and sign up to receive new episodes via email. You can also join the Slack or listen to any other episodes on there.

2:12:50 So Without uh Any further ado. We'll see you next time. We'll see you next time.

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