Oprah Winfrey swapped most of her interest in her namesake television network for shares in Discovery Inc., a deal that will increase the factual-based programmer’s interest in the channel to 95%, according to people familiar with the transaction and documents filed with the Securities and Exchange Commission.
Discovery launched the Oprah Winfrey Network (OWN) in 2011, capitalizing on Winfrey’s global popularity. The channel ran into some difficulties initially -- ratings were low and it racked up several years of losses -- but found its path later by targeting shows toward African-American women and producing shows with Tyler Perry.
This isn’t the first time that Winfrey has sold a portion of her interest in OWN to Discovery. In 2017, she sold part of her stake in the network to Discovery for $70 million in cash, increasing Discovery’s interest from 49.5% to 73.99%. The most recent transaction, valued at about $35 million, upped Discovery’s stake in the channel to 95%, according to people familiar with the matter. Winfrey, who owns a 5% stake in the channel, will continue as OWN’s CEO and chief creative officer.
Discovery filed documents with the SEC on Dec. 22 outlining Winfrey’s production company -- Harpo Inc.'s -- intention to sell about 670,470 shares of Discovery stock, half of her stake in the programmer.
Harpo has had the right to put the remaining non-controlling interest in OWN to Discovery during four 90-day windows beginning July 1, 2018 and every 2.5 years through Jan. 1, 2026. According to Discovery’s 2019 annual report, Harpo initially exercised that right in August 2018, but in November of that year withdrew the put notice after Discovery agreed that “upon any succeeding redemption the put payment value will equal the fair value of Harpo's equity interest in OWN plus an incremental 9.337% per annum for the 2.5 year period between the July 1, 2018 put right date and the Jan. 1, 2021 put right date.”
According to people familiar with the transaction, the value of Harpo’s Discovery stake is a combination of that earlier agreement and a 30-day average of Discovery’s share price.
News of the transaction comes shortly after Discovery announced plans for its streaming service, dubbed Discovery Plus, scheduled to launch on Jan. 4. That service will include programming from all of Discovery’s networks -- Food, HGTV, Discovery, TLC, ID, Travel Channel, Animal Planet and more -- as well as more than 50 shows from OWN.
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Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.
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