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Fighting Their OWN Battle

Discovery last week brought in former News Corp. star Peter Liguori to oversee a wide swath of its business, including the stake in Oprah Winfrey’s new network, OWN, and he’ll help guide a complex process to decide what ends up on the air.

As OWN readies to launch in January 2011, its management team is already deciding what sorts of programs will appear on the network, and in which time periods to present originals. But as part of the process, carriage deals, or the agreements the company makes with its affiliates—be they cable providers such as Comcast or Time Warner, telcos like Verizon FiOS, or satellite companies like DirectTV and DISH—will likely play a factor in what makes it on-air.

For OWN and all cable channels, the most important part of the carriage agreement is the fee. Right now Discovery Health, which will become OWN in January 2011, brings in an average of 12 cents per subscriber, according to SNL Kagan. OWN would still be bound by that agreement and that fee, at least until the deals run out and renegotiations take place.

Discovery is said to be seeking as much as 50 cents per subscriber for OWN, which would put it on par with many of the top cable networks like Turner’s TBS, which brings in an average of 47 cents; CNN (48 cents); and NBC Universal’s USA (55 cents). But obviously that would be a lofty accomplishment for a rookie, with or without a regular presence by the Queen of Daytime.

Along with the price come stipulations, promises to the carrier as to what the network will program and when. While theoretically the network could try to change the terms of the carriage agreement when it renegotiates the fees, rebranded channels typically find ways to expand their brands while staying true to their existing agreements. Turner’s TruTV, for example, kept its daytime courtroom programming in place because of its agreements, focusing its new, decidedly court-free programming in primetime.

In the case of OWN, the most notable aspect of the existing agreement would be the requirement that a certain amount of programming be health- and medical-related. Of course, Oprah, who has single-handedly launched the careers of Dr. Phil and Dr. Oz, is no stranger to the genre, and a spokesperson for the channel confirms that it will have a healthy dose (or at least however much is required per the agreements) once it launches. The channel could also seek to acquire cable rights to shows such as Dr. Oz, which would give it plenty of programming to fill that need. Discovery Health’s top rated program Dr. G: Medical Examiner is also being considered to remain on the channel once it becomes OWN.

Carriage agreements can also stipulate paid programming, a staple of late-night cable television. Cable networks typically share paid-programming revenue with the MSOs. That would not apply to OWN, however, as Discovery Health does not currently feature paid programming and there are no plans to have it on the new network, according to a spokesperson. The network will instead fill the late-night and fringe hours with reruns and acquired programming. This also means the network has an extra six hours to play with, should executives there choose to do so.