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Oprah (Harpo Studios)

Season 6, Episode 8

Limited Partner Episode

June 30, 2020
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We close out Season 6 with the story of perhaps the single most successful media entrepreneur of all-time: Oprah Winfrey, and her juggernaut conglomerate Harpo Studios. Born to a poor single mother in the segregated 1950's deep south, Oprah's rise from terrible adversity to wealthiest Black woman in the world ranks among the very greatest American success stories. And oh yeah — along the way she single-handedly created the entire influencer economy, rewrote the blueprint of a modern power broker, and set the world record for most cars given away at one time (276). Sit back, listen and get ready to live your best life.

Carveouts:

Sponsor:

  • Thanks to Silicon Valley Bank for being our banner sponsor for Acquired Season 6. You can learn more about SVB here: https://www.svb.com/next
  • Thank you as well to Wilson Sonsini - You can learn more about WSGR at: https://www.wsgr.com/

Sources:

We finally did it. After five years and over 100 episodes, we decided to formalize the answer to Acquired’s most frequently asked question: “what are the best acquisitions of all time?” Here it is: The Acquired Top Ten.

Note: we ranked the list by our estimate of absolute dollar return to the acquirer. We could have used ROI multiple or annualized return, but we decided the ultimate yardstick of success should be the absolute dollar amount added to the parent company’s enterprise value. Afterall, you can’t eat IRR! For more on our methodology, please see the notes at the end of this post. And for all our trademark Acquired editorial and discussion tune in to the full episode above!

10. Marvel

Purchase Price: $4.2 billion, 2009

Estimated Current Contribution to Market Cap: $20.5 billion

Absolute Dollar Return: $16.3 billion

Back in 2009, Marvel Studios was recently formed, most of its movie rights were leased out, and the prevailing wisdom was that Marvel was just some old comic book IP company that only nerds cared about. Since then, Marvel Cinematic Universe films have grossed $22.5b in total box office receipts (including the single biggest movie of all-time), for an average of $2.2b annually. Disney earns about two dollars in parks and merchandise revenue for every one dollar earned from films (discussed on our Disney, Plus episode). Therefore we estimate Marvel generates about $6.75b in annual revenue for Disney, or nearly 10% of all the company’s revenue. Not bad for a set of nerdy comic book franchises…

Marvel
Season 1, Episode 26
LP Show
1/5/2016

9. Google Maps (Where2, Keyhole, ZipDash)

Total Purchase Price: $70 million (estimated), 2004

Estimated Current Contribution to Market Cap: $16.9 billion

Absolute Dollar Return: $16.8 billion

Morgan Stanley estimated that Google Maps generated $2.95b in revenue in 2019. Although that’s small compared to Google’s overall revenue of $160b+, it still accounts for over $16b in market cap by our calculations. Ironically the majority of Maps’ usage (and presumably revenue) comes from mobile, which grew out of by far the smallest of the 3 acquisitions, ZipDash. Tiny yet mighty!

Google Maps
Season 5, Episode 3
LP Show
8/28/2019

8. ESPN

Total Purchase Price: $188 million (by ABC), 1984

Estimated Current Contribution to Market Cap: $31.2 billion

Absolute Dollar Return: $31.0 billion

ABC’s 1984 acquisition of ESPN is heavyweight champion and still undisputed G.O.A.T. of media acquisitions.With an estimated $10.3B in 2018 revenue, ESPN’s value has compounded annually within ABC/Disney at >15% for an astounding THIRTY-FIVE YEARS. Single-handedly responsible for one of the greatest business model innovations in history with the advent of cable carriage fees, ESPN proves Albert Einstein’s famous statement that “Compound interest is the eighth wonder of the world.”

ESPN
Season 4, Episode 1
LP Show
1/28/2019

7. PayPal

Total Purchase Price: $1.5 billion, 2002

Value Realized at Spinoff: $47.1 billion

Absolute Dollar Return: $45.6 billion

Who would have thought facilitating payments for Beanie Baby trades could be so lucrative? The only acquisition on our list whose value we can precisely measure, eBay spun off PayPal into a stand-alone public company in July 2015. Its value at the time? A cool 31x what eBay paid in 2002.

PayPal
Season 1, Episode 11
LP Show
5/8/2016

6. Booking.com

Total Purchase Price: $135 million, 2005

Estimated Current Contribution to Market Cap: $49.9 billion

Absolute Dollar Return: $49.8 billion

Remember the Priceline Negotiator? Boy did he get himself a screaming deal on this one. This purchase might have ranked even higher if Booking Holdings’ stock (Priceline even renamed the whole company after this acquisition!) weren’t down ~20% due to COVID-19 fears when we did the analysis. We also took a conservative approach, using only the (massive) $10.8b in annual revenue from the company’s “Agency Revenues” segment as Booking.com’s contribution — there is likely more revenue in other segments that’s also attributable to Booking.com, though we can’t be sure how much.

Booking.com (with Jetsetter & Room 77 CEO Drew Patterson)
Season 1, Episode 41
LP Show
6/25/2017

5. NeXT

Total Purchase Price: $429 million, 1997

Estimated Current Contribution to Market Cap: $63.0 billion

Absolute Dollar Return: $62.6 billion

How do you put a value on Steve Jobs? Turns out we didn’t have to! NeXTSTEP, NeXT’s operating system, underpins all of Apple’s modern operating systems today: MacOS, iOS, WatchOS, and beyond. Literally every dollar of Apple’s $260b in annual revenue comes from NeXT roots, and from Steve wiping the product slate clean upon his return. With the acquisition being necessary but not sufficient to create Apple’s $1.4 trillion market cap today, we conservatively attributed 5% of Apple to this purchase.

NeXT
Season 1, Episode 23
LP Show
10/23/2016

4. Android

Total Purchase Price: $50 million, 2005

Estimated Current Contribution to Market Cap: $72 billion

Absolute Dollar Return: $72 billion

Speaking of operating system acquisitions, NeXT was great, but on a pure value basis Android beats it. We took Google Play Store revenues (where Google’s 30% cut is worth about $7.7b) and added the dollar amount we estimate Google saves in Traffic Acquisition Costs by owning default search on Android ($4.8b), to reach an estimated annual revenue contribution to Google of $12.5b from the diminutive robot OS. Android also takes the award for largest ROI multiple: >1400x. Yep, you can’t eat IRR, but that’s a figure VCs only dream of.

Android
Season 1, Episode 20
LP Show
9/16/2016

3. YouTube

Total Purchase Price: $1.65 billion, 2006

Estimated Current Contribution to Market Cap: $86.2 billion

Absolute Dollar Return: $84.5 billion

We admit it, we screwed up on our first episode covering YouTube: there’s no way this deal was a “C”.  With Google recently reporting YouTube revenues for the first time ($15b — almost 10% of Google’s revenue!), it’s clear this acquisition was a juggernaut. It’s past-time for an Acquired revisit.

That said, while YouTube as the world’s second-highest-traffic search engine (second-only to their parent company!) grosses $15b, much of that revenue (over 50%?) gets paid out to creators, and YouTube’s hosting and bandwidth costs are significant. But we’ll leave the debate over the division’s profitability to the podcast.

YouTube
Season 1, Episode 7
LP Show
2/3/2016

2. DoubleClick

Total Purchase Price: $3.1 billion, 2007

Estimated Current Contribution to Market Cap: $126.4 billion

Absolute Dollar Return: $123.3 billion

A dark horse rides into second place! The only acquisition on this list not-yet covered on Acquired (to be remedied very soon), this deal was far, far more important than most people realize. Effectively extending Google’s advertising reach from just its own properties to the entire internet, DoubleClick and its associated products generated over $20b in revenue within Google last year. Given what we now know about the nature of competition in internet advertising services, it’s unlikely governments and antitrust authorities would allow another deal like this again, much like #1 on our list...

1. Instagram

Purchase Price: $1 billion, 2012

Estimated Current Contribution to Market Cap: $153 billion

Absolute Dollar Return: $152 billion

Source: SportsNation

When it comes to G.O.A.T. status, if ESPN is M&A’s Lebron, Insta is its MJ. No offense to ESPN/Lebron, but we’ll probably never see another acquisition that’s so unquestionably dominant across every dimension of the M&A game as Facebook’s 2012 purchase of Instagram. Reported by Bloomberg to be doing $20B of revenue annually now within Facebook (up from ~$0 just eight years ago), Instagram takes the Acquired crown by a mile. And unlike YouTube, Facebook keeps nearly all of that $20b for itself! At risk of stretching the MJ analogy too far, given the circumstances at the time of the deal — Facebook’s “missing” of mobile and existential questions surrounding its ill-fated IPO — buying Instagram was Facebook’s equivalent of Jordan’s Game 6. Whether this deal was ultimately good or bad for the world at-large is another question, but there’s no doubt Instagram goes down in history as the greatest acquisition of all-time.

Instagram
Season 1, Episode 2
LP Show
10/31/2015

The Acquired Top Ten data, in full.

Methodology and Notes:

  • In order to count for our list, acquisitions must be at least a majority stake in the target company (otherwise it’s just an investment). Naspers’ investment in Tencent and Softbank/Yahoo’s investment in Alibaba are disqualified for this reason.
  • We considered all historical acquisitions — not just technology companies — but may have overlooked some in areas that we know less well. If you have any examples you think we missed ping us on Slack or email at: acquiredfm@gmail.com
  • We used revenue multiples to estimate the current value of the acquired company, multiplying its current estimated revenue by the market cap-to-revenue multiple of the parent company’s stock. We recognize this analysis is flawed (cashflow/profit multiples are better, at least for mature companies), but given the opacity of most companies’ business unit reporting, this was the only way to apply a consistent and straightforward approach to each deal.
  • All underlying assumptions are based on public financial disclosures unless stated otherwise. If we made an assumption not disclosed by the parent company, we linked to the source of the reported assumption.
  • This ranking represents a point in time in history, March 2, 2020. It is obviously subject to change going forward from both future and past acquisition performance, as well as fluctuating stock prices.
  • We have five honorable mentions that didn’t make our Top Ten list. Tune into the full episode to hear them!

Sponsor:

  • Thanks to Silicon Valley Bank for being our banner sponsor for Acquired Season 6. You can learn more about SVB here: https://www.svb.com/next
  • Thank you as well to Wilson Sonsini - You can learn more about WSGR at: https://www.wsgr.com/

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Transcript: (disclaimer: may contain unintentionally confusing, inaccurate and/or amusing transcription errors)

Ben: 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.

David: I'm David Rosenthal.

Ben: And we are your hosts. Today, we are covering an incredible entrepreneur, Oprah Winfrey, and her company Harpo Studios. Oprah is a fixture of American life entering the homes of tens of millions of Americans through their television set every day at 4:00 PM for the 25-year run of her show.

David: The Oprah Winfrey show!! So great.

Ben: It is, but it is the unique story of her business decisions. How she created her brand across her show, a magazine, a cable channel, and more. How she controlled every detail and grew from TV personality to business mogul that we're going to cover today.

She is the first black female billionaire. Perhaps most relevant to the Acquired auditions, she really invented the idea of what we call today an influencer. If you watch a YouTuber, TikToker, have ever brought 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.

David: I don’t know if you saw, but I was watching David Dobrick quarantine YouTube a little bit ago where he and his crew drove around LA and tossed out gifts to people. They were tossing PS4s, cellphones, Xboxes, and then tossing $10,000 cheques and stuff.

Ben: Oprah has done it all.

David: You get a car. You get a car. You get a car.

Ben: We will get into it. A few announcements before we do. As this is our season finale, we are launching the season six survey. If you have 5–10 minutes, we would deeply appreciate you helping us to understand what you like, how we can make the show better, and possibly most importantly who you are.

We are giving away a set of AirPods Pro and 10 one-year Acquired LP subscriptions as a raffle that we will draw after closing the survey. If you want to help us out and take it, you can go to acquired.fm/survey or click the link on the show notes, and thank you so much if you decide to participate. We really appreciate it and it helps us make the show better.

David: Indeed.

Ben: 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 miniseries that we are calling Venture Capital Fundamentals.

We kicked off the six-part series with a deep dive into sourcing. How different firms do it, why it's important, and the different schools of thought around the topic. If you want to join, you can get access by clicking the link in the show notes or going to glow.fm/acquired and all subscription comes with a seven-day free trial.

David: We have a big announcement about the LP program coming later on the show. We put a little box on everybody's chair who's listening, don't shake it. We're going to open it at the same time. We do have an announcement in the middle of the show. Stay tuned.

Ben: The more you learn about Oprah, the more that you learn that as a media personality there's nothing you can do that Oprah hasn't already done.

David: Literally nothing.

Ben: Before we dive in, I'd like to welcome our sponsors for all of Season Six, Silicon Valley Bank. Thank you to SVB. 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.

David: One disclaimer before we get going is any time we're talking about Oprah, there is way too much to cover in one podcast episode, let alone one podcast show. We're talking about a woman who owns her own cable network, gets presidents elected, so we can't cover it all here. We're going to be covering her origin story and the business behind her.

Two fantastic sources if you want more Oprah—who doesn't more Oprah?—that you should go check out. One is the local Chicago NPR affiliate, WBEZ. Did a great podcast a couple of years ago that Jenn White did called Making Oprah. It's a three-part series with a few bonus episodes. Definitely go check that out. They interviewed Oprah. They interviewed Phil Donahue. It's great.

The other one is a number of years ago, Kitty Kelley wrote an unauthorized biography of Oprah which is extremely well-researched, controversial in many ways, but also forms a lot of the facts and basis for this. Definitely go read that if you want a long deep picture of Oprah Winfrey, or should I say Orpah Gayle Winfrey because that is the child that was born on January 29, 1954, in Kosciusko, Mississippi.

Ben: Yeah, wasn't it something like people mispronounced her name so she just said ah screw it and changed it when she was younger.

David: Yeah. Orpah is a biblical character in the Book of Ruth. That was Oprah's name, but yeah it's not a common name, people mispronounced it, read it incorrectly, and just started calling her Oprah or Opy when she was young and it stuck.

Ben: Wow. How history could have been different.

David: Indeed. What would have happened otherwise? Everybody knows Oprah, and some people may have a sense of her story that got her to become the Oprah that we know today. But I think a lot of people don't. I didn't before researching this and this is up there with Andrew Grove's story of such an incredible, incredible triumph over adversity to entrepreneurial success.

When Oprah was born in 1954 in Mississippi in the deep south, she was born to a single teenage mother, Vernita Lee, who was a housemaid. Her mother and the family believed that Orpah's father was a man named Vernon Winfrey and he believed that, too. It's actually extremely unlikely that biologically he was her father because he was on active military duty nine months before Oprah was born, but it is definitely true that he was and a father to her in every other sense of the word.

After giving birth, Vernita actually left Mississippi when Orpah was very, very young. Orpah, who already then people are starting to call her Oprah, was raised by her grandmother until she was six years old. Her grandmother taught her to read and started taking her to church. Even at 2–3 years old, Oprah already loved the stage. People nicknamed her The Preacher at church because she would recite bible verses for the congregation even as a tiny little child. That would go on to become a big theme in her life a little later.

At age six, Vernita was living in Milwaukee, Wisconsin at that point in time and had another daughter, a half-sister to Oprah named Patricia. She was sent back home to Mississippi and said, I'm ready to be a mother. Send Oprah and I'm going to raise these two girls together.

Patricia very sadly will die of a drug overdose at age 43. Oprah goes to Milwaukee, lives with her mother for a while. While she’s there, Vernita had another daughter who she put up for adoption that Oprah wouldn't even know about until only a couple of years ago they were reunited and a son named Jeffrey who would later die in the AIDS epidemic. Just terrible, terrible tragedy befalling this family and we haven't even got started yet.

Oprah shuttled back and forth from Milwaukee to Nashville where Vernon had moved. Vernon settled down there, 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, but were not able to and so loved when Oprah would come to visit.

Between six and nine, she shuffles back and forth. At age nine, though, she goes to live somewhat more permanently in Milwaukee and that's where she talks about one night, she was watching The Ed Sullivan Show on the television in her mother's apartment and Diana Ross and the Supremes were on.

This was a huge moment. The Beatles of course have been on Sullivan, but to have a Motown group, an African American group, and a group of black women on The Ed Sullivan Show Sunday night, primetime was a huge moment.

Oprah says, “I stopped wanting to be white when I was ten years old and I saw Diana Ross and The Supremes performed on The Ed Sullivan Show.” These were her worlds. “I was watching television on the linoleum floor at my mother's apartment. I'll never forget it. It was the first time I had ever seen a colored person wearing diamonds that I knew were real. I wanted to be Diana Ross. I had to be Diana Ross.”

Ben: Wow.

David: Yeah.

Ben: It's so interesting how in so many of these stories, you can pinpoint a moment in someone's life where it started to click for them. Where a key piece of who they would become snap into place and their motivation, you can understand from there.

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 to about seven minutes from now. Thanks.

David: Yeah. That was a great, great moment that will become a driving force on Oprah to this day. Unfortunately, right around that same time, there was a terrible moment that would also set her down a path that fortunately she stirred back from. Right around that same time when she was nine years old, she was raped in Milwaukee by a 19-year-old cousin. As you can imagine, completely shattering. This nine-year-old to be raped and exposed to everything at that age. She started spiraling. She started drinking. She started running away. She started having sex regularly.

Ben: Also, she's nine. What does spiraling even mean for a nine-year-old? This is heartbreaking.

David: Totally. Totally heartbreaking. The family doesn't understand. It's terrible.

Ben: I think a lot of the family didn't believe her when she later would tell people about this, that it got swept under the rug.

David: She spoke a lot about this and I can't even imagine. When she's 14—this has been going on for five years—she has been molested, abused, raped by several members of the family at this point, and others.

She runs away from home in Milwaukee—this is sort of a funny story [...]—the story that Oprah tells, Aretha Franklin was in town in Milwaukee giving a concert and she sees her in a limo. Oprah runs up to her in the limo and starts sweet-talking Aretha and says she's from Ohio. She makes up some story and needs bus fare to get home, and Aretha gives her $100. Oprah, of course, goes and rents a hotel room for the week [...]. Supposedly, when Vernita finally finds her, she calls up Vernon and says I can't deal with this girl anymore. You need to take her and take her permanently.

That's the last time she spends in Milwaukee and this sense being, thanks to Aretha—Aretha will come back later in the story—it's probably the best thing that ever happened to Oprah. She goes to live with Vernon and Zelma. They instill strict discipline and try to straighten her up. In addition to going to school—she's a sophomore in high school at this point—they require her to go to the library and write a book report for them every week in addition to her schoolwork.

Oprah [...] under this and is not happy. She's particularly not happy because she has a secret. She is pregnant and she tries to hide it from her family. She goes to East Nashville High, the first class to integrate the school. It had been an all-white school before that class.

Ben: I didn't realize that.

David: Yeah, crazy. She tries to hide it from everybody. She sulks at the back of the classroom and then a couple of months later that winter, Zelma figures out what's going on and Oprah is getting bigger, of course, and can no longer hide it.

Zelma takes her to a doctor, forcing her to come to a doctor's appointment. Of course, confirms she's pregnant and Oprah says later, “I'm going to go home and tell my father. It was the hardest thing I ever did. I want to kill myself.” It was just I can't imagine.

Through all of this, Oprah ends up going into labor two months early. She has a son, a baby boy, born in February 1969. Oprah had just turned 15 and because the baby was born so early and that time they didn't have the care that [...] have today, the baby ended up dying a month later in the hospital.

Ben: So sad.

David: So sad.

Ben: Just looking at this six-year span, we've covered a lot of people on this show who have overcome adversity. Oprah's story is almost incomparable in the amount of trauma that she went through in those six years.

We've said a couple of times the phrase, you and I both said it I think, I can only imagine or I can't even imagine. It's so far outside the realm of the lived experiences that I’ve had, and I'd imagine the same for many of our listeners that it requires a different set of words that I really have for this.

In doing the research for this episode. It is truly unbelievable and just an unbelievable story of character, willpower, and who Oprah is as a human, that she was able to become who she became after going through all of these terrible, terrible events.

David: The only story that we told on this show that I think can even come somewhat close is Andrew Grove's story looking through the Holocaust in Europe and Hungary.

The heartbreaking thing about Oprah's story here that this still happens. This happens for so many people and it still happens. David, you touched on something important there, these are manifestations of systemic problems of racism, oppression, and also of violence against women.

I mean, it's not just one story about getting a bad luck of the draw here.

David: Yeah.

The pregnancy and the baby dying was a total family secret. Vernon, Zelma, and Oprah knew, but nobody else knew. The family kept it completely hidden and didn't tell anybody until 1990. Many, many years later after.

Ben: Seven years into her show.

David: Yeah. It came out and Oprah finally talked about it. Vernon has a quote. This is in the Kitty Kelly book. He says that when it happened, he said to Oprah, “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, so I think God is giving you a second chance. If I were you, I would use it.”

Ben: Whoa. That's hardcore.

David: That is hardcore, heavy stuff. But that is exactly what Oprah does. She goes back to school. She takes a week off from school after all this; goes back to school. We're now in late winter of her sophomore year in high school and she just completely reinvents herself. She says, “I went back to school and not a soul knew. Nobody. Otherwise, I never would have had this life that I've had.”

She goes back and she's completely different. She tells everybody that she's going to be a movie star and she's going to be famous. She marches into her English teacher's class and tells her this. Her teacher's like, okay, great. I’ll encourage you. She introduces Oprah to a book of poetry by James Weldon Johnson called God's Trombones: Eight Negro Sermons in Verse. Oprah loves these poems. She starts doing dramatic readings of them in a community and in churches around the city, and she starts becoming a local celebrity. Her readings of these and again, nobody knows her secret, but for a 15-year-old just this incredible oration and she has this deep Oprah voice already that we all know now.

She ends up, through doing this, she gets the chance to travel to Los Angeles and read for other black church groups in LA. She's 15 years old, she visits the Hollywood Walk of Fame 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 that street and I said to myself one day I'm going to put my own star among these stars.”

Ben: One day, I can buy any star I want.

David: Yeah, and buy the whole walk. Again, on the encouragement of her English teacher (I think) she joined what was then called the National Forensic League at school. It's now the National Speech and Debate Association. She starts giving orations and speeches at educational contests locally and around the state. She starts winning these competitions, then she starts competing nationally. She's traveling all over the country winning competitions. She goes to Philadelphia. She won some major competition there.

She ends up, it's probably the next year, her junior year, getting elected as vice-president of the class. The first black class officer. Remember, the high school just integrated the year before, and she gets elected most popular in the school. Her grades get her into the National Honors Society. Then, her senior year in 1971—this is kind of crazy—the Richard Nixon Whitehouse at that time held this thing called the Whitehouse Conference on Children and Youth. It took place in Colorado.

Ben: They selected high schoolers?

David: Yeah. The idea was they pulled together 1000 highschoolers from around the country. They wanted this broad cross-section of American high school seniors. That these were going to be the future leaders of America and that they are going to have this conference, these delegates, and they were going to put forward a policy proposal for the United States.

Ben: It sounds like Model UN.

David: Totally. It is. Oprah, on the back of this, gets back to Nashville. She ends up participating in the March of Dimes Fundraiser and she goes to one of the DJs at the local black radio station, getting John Heidelberg, WVOL, and asks him to sponsor. Hey, who's got a platform that's going to get my name to a lot of people, get good sponsors here? Radio station DJ. When he's talking to her, he's like, you’ve got a really really great voice.

Ben: You should do radio.

David: Yeah, you should do radio. You should have a podcast. He tells a bunch of his colleagues this young girl is pretty impressive. She comes back, she does the thing, comes back to collect the sponsorship after the march and he and a bunch of other folks at the radio station were like, why don't you make a demo tape? They have her make a tape, they cut a tape while she's there.

Ben: How old is she at this point? Because this is her first broadcast journalism foray, right?

David: I think she's 17 at this point.

Ben: Okay. I'm asking you as if you're like an Oprah scholar, but do you know if there's any inclination of what she wanted to do with her life at this point? Would she have seen this as this is my in, this is my opportunity?

David: Totally. She was telling everybody at school. This might have been a part of the voting for most popular. There's a survey in school about who you want to be when you grow up and her answer was famous. And she’d seen the stars on the Walk of Fame. They first gave her a job just working part-time in the studio and then they gave her a show. She gets a real honest to God radio show as a senior in high school.

She graduates, she enrolls locally in Nashville at Tennessee State University for college. It's historically a black university in Nashville. Of course, she's super smart. She loves reading (as we'll come up later) and education. She cares about college. Vernon and Zelma really care about her getting a college degree, but really she just wants to focus on the show. 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, and she starts to keep up in her sites, setting them even higher.

She decides she wants to get into TV. She must have been probably a sophomore in college at this point. Legend has it that she interviews Jesse Jackson on the radio show and Jesse Jackson must have been pretty young at this point, too, but already very famous. Apparently, after the interview, Oprah says this later, he tells her, “You have the gift.”

Ben: Wow, and this is what? 1973 and she wouldn't start what we know as The Oprah Winfrey Show until 83ish? A whole decade.

David: This would have been 70 or 71. We're way, way [...]. Apparently, Jesse Jackson called it first. On the back of that, she sets her sight on TV. Everybody at the radio station is super supportive, They know she's going places.

Ben: Also, does cable exist yet? TV at this point is just a broadcast network, right?

David: Cables are starting to become big. I think we talked about this on the ESPN episode. It was really for rural areas that couldn't get broadcast reception at this point of time.

Ben: Right. That they would relay the broadcast signals over satellite, that bounce of the satellites down to the ground tower, and then use the cable to distribute.

David: When did ESPN start? It was a little few years later, but it was in the 70s. Ted Turner started (I think) about cable networks, but this is still…

Ben: In terms of the types of programming, SNL wouldn't start until 75, so we're…

David: We're closer to Ed Sullivan than we are to ESPN. Also, this is super important. Because of all of this, it's the local affiliates of the big national broadcast stations that that is what people think of when they think of TV, specifically they think of the evening news. The evening TV news is the crown jewel. You think of the top of the TV, that's what you think and that's what Oprah is thinking. I don't know how much of this was a calculated plan. Knowing Oprah a little bit vicariously now, I suspect it was.

In 1972, she's a college student at TSU. She enters the Miss Black Nashville beauty pageant. It was a beauty pageant. It's like Miss America style stuff with talent and all the stuff. She wins that and then she enters Miss Black Tennessee. She wins that, she becomes Miss Black Tennessee. She goes to the Miss Black America overall thing in LA. She places like the bottom.

Ben: Also, how horrible is it that there is Miss Black Tennessee? That’s not just part of—

David: Totally.

Ben: Let me pop-up another level and generally condemn the beauty pageant industry, but then the racist part. Good for Oprah for using that as a platform.

David: Totally used it as a stepping stone. She ends up like 43rd out of 50 in the national competition, but it doesn't matter. She gets back after that to Nashville. Her radio station calls at this point. She's proven that she has some credentials of looks in addition to voice and poise in front of people. Her radio station colleagues call up the local CBS affiliate in Nashville WLAC and tell them you got to hire this girl. Her calling is beyond radio.

Ben: One playbook theme that I'll pull forward here is 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. She always had to do a non-traditional thing to give herself a platform and a credential for a reason why she would be the obvious choice over the default obvious choice. This is a great example of her creativity and her drive to go and acquire whatever credential or whatever leverage she needed to in order to go and become the person that gets that next spot.

David: At every step of her career, she's always thinking about the next step. She does it in such a way that it’s not like you could view that as super cunning and conniving.

Ben: Right. It's not conniving. It's done with poise.

David: Yeah. Everybody knows it. She’s super upfront. She's like, I want the star on the Hall of Fame. I want to own it.

So, WLAC brings her on, they hire her. She becomes the first black woman on television in Nashville, I think in all of Tennessee, but definitely in Nashville. All while she's still in college, by the way. She comes on board as a reporter for the news. Not an anchor but a field reporter. It turns out, among Oprah's many, many great strengths, being a news reporter is not one of them (which she will freely admit). She's not a super great reporter but people love her. She's got the gift. When she's on camera, certainly nobody looks like her on television, but nobody sounds like her either. You think of TV news reporters you think of like [...].

Ben: Right. She's relatable, she's authentic, and she's powerful.

David: Exactly. She's one of the audience. The station sees people love her. She gets promoted to be an anchor in the evening news.

Ben: You’re not doing so good at being a reporter. You should come to be the anchor.

David: Just come be the anchor. Stop this reporting stuff. Very quickly after that, she gets recruited to move to Baltimore and take the co-anchor job in the evening news next to Jerry Turner who was a total legend at WJZ in Baltimore. The reason she does it, she makes the move, is Baltimore is a much bigger media market than Nashville, 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 in general.

Ben: I’ve seen the Anchorman, I'm familiar.

David: Yeah, exactly. If you've seen Anchorman you know exactly how this works. Jerry is Will Ferrell, basically. Oprah drops out of TSU and makes the move up to Baltimore. She gets there and probably predictably she and Jerry don't get along or see eye-to-eye on the style. He's super old-school, Edward Murrow style, like echo the news, and she's Oprah. That could work great but in this case, it doesn't work super great. A few months in she gets demoted. She has a multi-year contract with the station so they can't fire her, but she gets demoted from the co-anchor spot. She gets put in the slot as the weekend features reporter.

Ben: I don't know much about TV but that doesn't sound good.

David: Yeah. The assignments she gets are stuff like she covers the cockatoo’s birthday party at the zoo; pretty rough. For somebody as ambitious as Oprah, overcome everything she's overcome, and then just had this shooting-star ascent from high school junior to co-anchor next to Jerry in a huge media market on the number one station in just a couple of years, this is a pretty big blow. But also, Oprah is not deterred, especially after everything she's been through in life. This isn't going to stop her. She rolls up her sleeves and gets to work. S­­he's like, I'm going to be the best damn weekend features reporter that has ever been.

Ben: Cockatoo birthday party reporter there is.

David: Exactly. The seeds of The Oprah Winfrey Show are sown right there. We're joking but kind of true. She does that for a couple of years and then gets the next big break when the station decides that they're going to start doing a morning talk show after the news. They're inspired by Phil Donahue, who's been around for many years at this point but it's taking off. Phil is from Ohio. He’s from Cleveland, actually, originally, that’s 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 a major phenomenon, like this whole new category.

Ben: The daytime talk show. That was not a thing until Donahue.

David: It was not a thing. What it used to be before Donahue was you had the morning news and then during the day, you had just all syndicated, like Wheel of Fortune, game shows. Donahue has this great quote in the WBEZ podcast with Jenn White. I can't remember exactly what he says, but he's kind of making fun of them. It was all like come on down, click, click, click, and whoop-dee-doo.

Ben: Give them a spin.

David: Yeah, exactly. That was daytime TV. He introduced this talk show format and people loved it.

Ben: We should say, these daytime TV syndicated game shows had a massive audience. Those things were cash cows when they got syndicated. At this time it was Wheel of Fortune but not yet Jeopardy if I'm remembering it right. Those were huge syndication deals.

David: Totally. I can't remember When the Price is Right started.

Ben: Right around that time, too.

David: That kind of stuff. It wasn't that this stuff was that compelling. It was just that a lot of people, particularly suburban housewives, watch TV during the day. They were going to watch whatever was on. This was what was on. It wasn't that it was good. When Donahue shows up, they're like oh wow this is actually speaking to us. This is good. We'll watch this instead.

Ben: You just said there, David, is really important to drill home for everyone. We live in a pretty male-dominated work culture and society now. Then, in the 70s, basically, dad went to work and mom stayed home. Daytime TV was for mom to watch whatever mom was going to watch. That's a really important thing to understand about the kindling that was there for this fire that Oprah would create.

David: Totally. What’s super interesting—to pull forward that is—is that was true but also people just didn't understand anything. That was true but also there were a lot of jobs, there were a lot of workplaces where there were men and women that had TVs on during the day. Think about the auto mechanic shop or anywhere, you name it. A 7-Eleven. I remember not too much after this time when I was growing up, when I was a little kid, my parents were both lawyers, they had their own firm in Westchester, Pennsylvania. During the summers, they just bring me along to the firm, stick me in the back office with the TV and entertain yourself. What would I do? I watched Oprah all day and Phil.

Ben: No way, really?

David: Yeah. The TV. Now we all have our cell phones.

Ben: That's what, the mid-90s?

David: No. This would have been even earlier, like the late 80s, early 90s.

Ben: Dude, that's so funny. Aside from our story, I was going to say I've never actually watched an episode of Oprah. I'd watched a bunch prepare for this episode, but before this, the things I knew about Oprah were like through my grandma. I think my grandma may have watched every episode, or through headlines, and through the things, you know about Oprah because they were major pop-culture moments. I feel like we have way more credibility now that you actually grew up watching the show.

David: I grew up watching a lot of Oprah in the summers. All these shows—Maury. But I think that was the point was, again to pull forward to influencers and what this would become with YouTube, the Internet, TikTok, and everything. Everybody wants to watch something during the day no matter what you're doing.

Ben: What was Donahue doing? What was his show?

David: What Donahue was doing was covering subjects in a talk show format, in an interview talk show format, that he and his producers—were mostly women—thought would be appealing to suburban housewives. Unlike a game show or something like that, what they really tried to do was think of what is on these folks’ minds? What would they like to hear about? What kind of questions would they ask if they were asking the guests these questions? They would put these folks in the audience and then he would go around with the microphone. He was the first one to do this in the audience and be like you, the audience member, ask the question. What do you think?

Ben: And he would have celebrity guests on, right?

David: Yup. Celebrity guests and I think—I believe this is right—he had the first openly gay person on TV to talk about being gay. This happened in the 60s. This is the kind of stuff that he was doing, just human interest-type stories, in addition to celebrities.

Ben: This genre evolved out of morning news, right? Donahue’s show was a 10:00 AM or 11:00 AM show, right?

David: Yup. It was to follow the news.

Ben: Got it.

David: The idea was, again, we're in 60s America. Dad goes to work, kids go to school, and mom is now watching TV. That was the idea for Donahue. Anyway, it took off. In Baltimore, lots of local stations were saying we need our own morning talk show. They decided to start a show called People are Talking.

Ben: Which is an amazing name for a talk show. Somebody bring that back.

David: Totally. That should be a YouTube, TikTok channel. People are Talking. They have the perfect host there. They tap Oprah to host it. Amazingly, Oprah initially doesn't want to do it. Remember, the evening news slot, anchoring the evening news, that is what being a star means. That’s the definition of the top. She's like what is this? I don’t want daytime TV.

Ben: Yeah. You guys already shoved me over to covering zoos. What are you trying to put me on now?

David: You’re trying to push me even lower on the totem pole. But they convinced her to do it. She does it. She does the first show and she's like oh I was born to do this. This is great, and people love it. Within months, weeks, people are talking, becomes bigger than Donahue in Baltimore. It's only local, it's not syndicated yet. It's just in the Baltimore market, but it's competing for the same time slot as the Donahue show, and she's beating him. He's the king of morning talk.

Eventually, this starts to get noticed in the media world. Eventually, people are talking, gets a deal for national syndication, and the idea is it's going to go up and compete against Donahue, but it only gets into 17 markets and it flops nationally. I don't know exactly why. I don't know if it was maybe too parochial to Baltimore or just what, but it doesn't work and the syndication deal gets canceled.

Ben: Help us understand. What is a syndication deal? What does that mean? How do you get syndicated to other markets? What companies are involved? What does economics look like?

David: The biggest syndicator at this point in time is a company called King World. I don't know if People are Talking was syndicated through King World or another company. Basically, these groups, of which King World is the largest, are just media rights distribution companies. They would go around pick up shows, which all shows at this point in time we're being produced locally by local TV stations in any given market around the country, pick up shows that they thought had potential, and then do a licensing deal with them to then re-syndicate those shows out to other local TV stations around the country.

Ben: That's even the way it would have worked for a game show. 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. They would go get it in all the other markets even though you're still making it there in Baltimore, Chicago, or wherever.

David: Yup. King World had Wheel of Fortune, they had Jeopardy, and all these shows. What's interesting is this seems so crazy today, I didn't even realize this growing up, but you think of your local TV station like in Philadelphia where I was growing up, channel 3 was the CBS affiliate. You think of it as like there’s CBS, there's ABC, and there's NBC, the big broadcast networks. Those stations are independent businesses. They affiliate with the big broadcast networks, but that's really essentially only for primetime TV, kind of a 7:00 PM to 10:00 PM program.

Ben: Yeah, they're 20 hours a day. They're producing all their own stuff.

David: They're an independent business, so to fill a lot of those hours, they'd work with these indicators like King World to bring in syndicated shows. All this is happening outside of ABC, NBC, and CBS. They don't really care what their affiliates are doing during the rest of the non-primetime hours. All that business is separate.

Ben: The interesting thing about these syndicators, too, that I didn't really realize is since they're getting to participate in the upside of the success, 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 a profit-sharing deal. They would come to you, they would say right now you're only getting to address Baltimore, we think you could play in these 17 markets, we're going to take some cut. I think the cuts vary wildly so I can't describe the prototypical deal. We're going to take some cut of the ad dollars that come in from whatever those TV networks in Houston, Phoenix, and Cleveland are able to generate, and then we're going to give the rest to you.

For a station who owns the rights to a show, you're like great, it's all upside. Anything additional you can get is new marginal revenue, it doesn't cost me anything. Take whatever percentage you feel you need. Of course, it's not that cordial, but you can see why there's this revenue share or profit share agreements that get worked out to do that. Being a syndicator, if you get a hit, can be enormously lucrative.

David: Ben, you may know the detailed economics of these types of arrangements better than me, but I think it's inspired by and very similar to the book publishing industry, another industry we're going to bring up in a minute, where the author writes a book that's a fixed cost investment on the part of the author. In this case, it's local TV station produces a show, produces the content, and that's a fixed cost investment. Then, you work with a publisher to distribute that around the country or the world. Then, you share some portion of the revenue from that.

Ben: Yup, and much like the book publishing industry syndication evolves into a guaranteed advance or guaranteed upfront where they say look, we think this thing is going to do so well we're going to give you a big chunk of that upfront. When the number hits the part that we've already given you, then you'll get to participate in this percent of the revenue above that. 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.

You can see already the incentives of a syndicator are to lock in a deal as long as possible, at the most favorable economics. The incentives of a creator are either to get as much upfront as possible in advance or to make the deal as short as possible so that if you start to get leverage by being really popular, then you can go back to your syndicator and go, you need me more than I need you. We'll see how that plays out.

David: Specifically keep the rights to your content. That'll come in one sec. All this is going on even though People are Talking fails on national syndication, Oprah's still a big star in Baltimore. Then in 1983 is when the big, big, big break comes. One of the producers at the station in Baltimore on People are Talking was a woman named Debbie DiMaio. Debbie had moved to Chicago a little bit earlier and joined the local ABC affiliate in Chicago WLS, which was owned by Capital Cities, which may go a long time Acquired listeners and capital allocation fans smile. Debbie's a producer now.

Ben: If you're digging these 70s TV references, go listen to the ESPN episode because we probably did a much deeper dive into how the industry dynamics of that worked then.

David: Yup. Debbie's now working at WLS in Chicago, and they have their own morning talk show, AM Chicago. One of the co-hosts, two co-hosts, one of the co-hosts leaves. Debbie goes to her boss and says you got to get Oprah out here. Oprah's ready for a bigger stage. Oprah's going to be the perfect show. She's going to be perfect for Chicago. We got to lure her away from Baltimore.

At the time, the station had a new boss, who was Debbie's boss, a man named Dennis Swanson. He was there because WLS had been kind of in the dumps. I think it was lowest among all the local affiliates in ratings in Chicago. He had been installed by Capital Cities, which owned the station, to fix it. Of course, Capital Cities is run by Tom Murphy and Dan Burke master capital allocators. Warren Buffett calls them the greatest operating duo of all time, I think.

Ben: Yeah. Famously very decentralized. Install someone, let them run the TV station, and we'll get out of their way.

David: Dennis is new, he's there to fix it. He hears Debbie's pitch and he says okay, great. Let's get her out here. We'll do a trial run. We'll bring her on the set of AM Chicago. We'll watch her do a show on and we'll see.

Ben: I think it's on a Saturday, right? We're just going to pretend that it's a real episode but it's not going anywhere. We're just going to watch it inside the studio.

David: Yeah, It's a mock episode. She flies out, she does it, and Swanson’s blown away. He's like okay. Not only is Oprah an amazing talent, but he's like this is the key. Now, remember, Donahue is the OG, the king of morning talk. He's recording in Chicago at WGN where he's producing Donahue and then being syndicated nationally. He's there across the street and he's like, this is how we're going to beat Donahue. We're not going to out-Donahue Donahue, we're going to zig where he's zagging. We're going to bring in Oprah. We're going to bring in a black woman to host this.

He immediately takes Oprah upstairs to his office after the mock show and he offers her the job on the spot, $200,000 salary. Way more than she's making in Baltimore. He says, “You got to do it. I want you to start now.” Famously, Oprah says, “Well do you have any concerns?” Dennis says, “No.” She says, “You know I'm black.” Dennis says, “Yeah, I can see that.” Then she says, “And you know I'm overweight.” 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. You are America. That's the whole point.” She's like, “Okay.”

She signs the deal. Dennis calls up the Capital Cities brass and they're like, you sure about this one? He's like, no, no, trust me. This is going to work.

Ben: You know your job is on the line, too, with these decisions you make?

David: Yup. Remember, he was there specifically to fix the station. He says, no, no, no. Trust me. This is going to work. Of course, it does. Oprah makes the move out to Chicago and they debut the show in January 1984. It is an instant success, like literally instant overnight.

Ben: This is AM Chicago is the show?

David: AM Chicago is the show. 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. Not just women, it's half of the city. Remember, Donahue was recording in the same city. She's completely destroying Donahue in his hometown.

Ben: It’s one thing to out-Donahue Donahue only in Baltimore, but to be scoped to one local market and be Donahue's market and out-Donohue Donahue, that's a big deal.

David: Huge, huge deal. A couple of things happen on the back of this. Tom and Dan in Capital Cities are like, Dennis, job well done. We are going to promote you. He gets promoted up to ABC because remember, Capital Cities had acquired ABC at this point. Minnow swallows whale was the headline that we talked about on the ESPN episode. We're going to promote you up to ABC to the national broadcasting part of the business, you're going to run a big chunk of that. He ends up running ABC Sports where he inherits, as a direct report, Bob Iger.

Ben: No way. That's awesome.

David: Isn't that awesome? Bob wrote in The Ride of a Lifetime that at first, when Dennis came, Dennis was this outsider from this local affiliate guy.

Ben: I never made the connection this is the same Dennis.

David: Same Dennis. He comes in, Bob had been working in ABC Sports under Roone Arledge, and Dennis comes in. Bob actually is about to leave. He gets a job offer to go join a talent agency. He's going to leave, quit Capital Cities and ABC, and then he meets with Dennis. Dennis is like don't do that, I'm going to promote you. Dennis then promotes Bob to take over all of ABC Entertainment. He moves out to Hollywood, then he becomes COO of all of Cap Cities. Then, of course, the Disney merger and all of that ‘ride of a lifetime’ stuff.

Ben: Dennis has the magic touch. I suppose he's a good picker.

David: He's a good identifier of talent that is for sure. Literally, Bob was about to quit Cap Cities and go have this whole different life until he met Dennis.

Ben: Here's another good tech theme. Let's pivot away from Iger for a second and back to Oprah. What a contrarian bet to bet on Oprah. It takes probably a lot of guts. He promoted a super under-represented minority person to take a huge bet and put I don't know how much of his career is on the line but some amount of his credibility, maybe all this credibility on the line.

What he was doing there, nobody should applaud him for altruism. It was a self-serving investment. It was a sort of non-consensus bet that he was making and saying by doing something other people aren't doing here that I think is awesome, we're all going to go be super successful.

He was right. Especially at this moment that we're in now, let that be the message that by doing something, not consensus, and by zigging where others are zagging, you can be enormously profitable.

David: This was such a classic Acquired. Cars driving towards the cliff, pulling the ebrake, and spinning around because the station was in the dumps. One approach to fixing it could have been like okay well we're going to do operational efficiency, which Dennis did, too. We're going to step-by-step, 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. I'm going to bring in this super knight. We're going to be David against Goliath here.

Ben: Complete on a different playing field.

David: Complete on a totally different playing field. She and they dethroned Donahue in a week. It’s crazy. The other thing that happens, so Debbie DiMaio gets promoted to be the Executive Producer of the show. They expand the show from 30 minutes AM Chicago to 60 minutes (a full hour), they rename it to The Oprah Winfrey Show. Let's be honest about what the draw is here. On the back of all this, Oprah says, “I need a new agent. I need a real agent here.” I forget who her agent was before.

Ben: Here's the story here, and this from a great Forbes article. WLS had been paying Oprah $230,000 a year. She got $230,000 that first year and then it was going to go up by $30,000 each year in her four-year contract, and this is from the Forbes story.

As she tells it, she was pleased at first but then began having second thoughts. “Three separate ABC people stopped me to tell me what a great guy my agent was,” Winfrey recalls, “and that didn't make sense to me.” Why were people going out of their way to praise the fellow?” Winfrey's natural skepticism was aroused. She sacked the agent. She replaced him with a Chicago lawyer named Jeffrey Jacobs. “I'd heard Jeff is a piranha,” she says of her choice, “I like that. Piranha is good.”

David: Oh boy. I didn't find that. That is amazing.

Ben: It's a great observation. If people who you were just negotiating against are praising your agent, you got had.

David: You need a new agent, oh man. Great. Jeff and Oprah would be business partners for about 20 years. He both negotiates a much, much, much better deal for her and brings her into national syndication and everything. Two things happen in the next year or so that completely change.

Ben: Where are we? This is 1985?

David: This is 1984, 1984–1985. That completely changed Oprah's mindset about what her goals are. When Jeff comes on board, he says like, I’m going to get you a much better deal with a much better salary with WLS and all that. Great. We'll do good.

Ben: He immediately does. It was like 100 times more. He was getting her first-year salary in the $30 million category.

David: That was once national syndication started. I don't know exactly what it was with when she was just AM Chicago but certainly more. He convinces her like, you got to think about your career. You don't want to just be talent. I can negotiate deals for you as talent all you want, but that's not interesting. What matters is not how much you make, it's how much you keep. This is a quote from him: “Don't be a talent for hire. Own yourself. Don't take a salary, take a piece of the action.” That's bumping around in Oprah's mind.

The other big thing that happens in this time is Alice Walker's novel, The Color Purple is being made into a huge film event with Steven Spielberg as the director. He's going through casting, and Quincy Jones has signed on to the project as a producer and is doing the music. Quincy tells Steven, “Hey, you might want to look into this rising star TV personality in Chicago who I think would be perfect to play Sofia in the movie.” Spielberg meets Oprah and of course, the rest is history there.

It's natural, Oprah plays Sofia 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. Brings her out to Hollywood, introduces her to all the real power brokers in Hollywood, and she realizes through his advice and seeing all this that the way you get really powerful isn't to be a movie star, it's to own the production. It's to be an owner. That's the same thing that Jacobs had been effectively telling her. The new star is like, okay, I’m going to get my star on Hollywood boulevard but literally, I’m going to own the boulevard. That's how you make the real money and get real power.

Ben: This permeates her thinking for the rest of her life. Now we can see everything set in motion where everything for Oprah becomes about control, only doing things that she wants, doing things on her terms, doing things that feel authentic to her. 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 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 tranche of guaranteed money. It's really about ownership.

It actually reminds me of another episode we did, David, with Recode when we had Kara Swisher on. Kara talked about how her deal with the Wall Street Journal was, hey look, we're going to do all things digital, Walt and I. He's an employee and that's all good, but I’m coming on contract. Walt and I own all things digital. You can contract with us for us to have that be a part of your publication for a period of time, but that's a thing that I own. I don't work for you. I don't have an employment agreement. I think it’s an interesting parallel because it allowed her then to go and do Recode and take the band with her and have that control.

David: This is the path. This is the way you become an entrepreneur in the media world, and it certainly carries much more risk than a guaranteed salary payment from whatever big media company. As we'll see with Oprah, I think she's very glad she took this path.

Ben: Not to mention, you need demonstrated success in order to pull this off in your negotiation because you need the leverage to be able to say it's frankly 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 publication.

David: While all this is happening, King World—remember, people are talking back in Baltimore, failed on national syndication—is not blind to what's happening in Chicago now. They come to WLS and to Oprah. They say we're going to take The Oprah Winfrey show national, syndicated in a big way, not 17 markets, 138 markets.

Ben: Did she only do The Oprah Winfrey Show for one season in Chicago before King World was like, and time to go national?

David: The first national show was September 1986, so I think it was two years, two seasons in, 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 national. She actually leaves filming for a week from The Color Purple, tells Spielberg, I got to go negotiate my national syndication deal. He's like, okay. Then it all hits.

The Color Purple comes out at Christmas 1985. It's huge, and gets 11 Academy Award nominations. Oprah’s going on The Tonight Show, she's getting magazine covers, she's promoting the film, but she's also promoting her show, which is about to become a national show. She starts to realize like hey this is a virtuous cycle.

On September 8, 1986, the first national show is broadcast. I can’t remember if it was before or after she did an interview with Bill Zehme, which was intended to be for Vanity Fair as part of this publicity run. Tina Brown, who was then the editor of Vanity Fair in what would start a feud between her and Oprah that I think last to this day, killed it. The interview ended up appearing in Spy Magazine instead. In this interview, she said to Bill, “I intend to be the richest black woman in America. I intend to be a mogul.” The mindset has taken.

Ben: I used the word mogul in the intro. I was like is it fair? Would she like that? I didn't realize she actually used the word.

David: That's her word. She's pressing the advantage. September 8, 1986, first national Oprah Winfrey Show airs in 138 markets. On the WBEZ podcast, I think it's Debbie DiMaio tells the story of how they tried to get Don Johnson from Miami Vice as the cast but couldn't get him.

Ben: They couldn’t get him.

David: It was so amazing. If only they had.

Ben: This is on that great podcast that David mentioned at the top of the show. There's a great discussion of the culture of The Oprah Winfrey Show at this point. It's effectively four scrappy women in a room coming up with stories, making phone calls, hustling, and doing just heroic effort to put together an hour of TV every day. You can imagine what The Oprah Winfrey Show turned into. Hundreds and hundreds of people, producers, and just massive staff to be able to pull off these gambits that they did.

David: I think Harpo has 12,000 employees now.

Ben: Amazing. At this point it was a startup, it was incredibly scrappy. On the one hand, they're in 138 markets. How can they possibly not get Don Johnson to come on the show? They're just hustlers and they only have the track record of being a local show before this.

David: This actually is the other piece to the magic. Oprah had the gift and that got her to this point. She now has the aim for the mogul mindset, that's the second piece. I think the third piece of the magic is that Oprah 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. I’m going to read in a sec, verbatim, Oprah's cold opening to the first national show, but keep in mind, as I’m saying this, what Oprah is, who she is here, and how she's coming across.

This is the opening of the show, “I’m Oprah Winfrey and welcome to the first national Oprah Winfrey Show.” Just screams the classic Oprah. This is the next line, “There has been so much hoopla about this premiere show that it's enough to give a girl hives. I mean I’ve got them right now under my armpits. One thing I’ve learned is that no matter how far down you go, and I tell you, I’ve been down on my knees with the best of you, no matter how low you feel this show always allows people, hopefully, to understand the power they have to change their own lives. Now, I don't have a lot of problems in my life. I have to tell you, things are going pretty good for me right now, but two things have bugged me for years. The first, my thighs. The second, my love life.” Then she introduces Margaret.

Okay, just think about that. WBEZ podcast talks about this, the target audience is Suzy. They identify Suzy as this mythical—

Ben: Also, is this the first persona? Startups are obsessed with persona development now. They actually named a false audience member Suzy and had that as a persona that they would like to check against.

David: That is the persona. It's like Amazon where the empty seat in the room for the customer. It's like the empty seat in the producer's room for Suzy. What does Suzy want to know? Suzy is a suburban mom. They're always asking themselves who is Suzy? Who are Suzy's friends? What does Suzy relate to? What are the questions Suzy wants to ask? Compare that opening from Oprah, to Donahue, to the evening news, to the Wheel of Fortune, or anything that's on TV right now. Suzy's their friend.

Ben: It's just so unbelievably authentic. It's so different from what you're hearing on TV that's widely produced at any other daytime slot at this point, especially any prime time slot. Nobody's talking about hives under their arms or their thighs. The very first time that the vast majority of viewers are seeing Oprah and they're having this really intimate relationship with her.

David: Two years later, in 1988, the highest-rated, most-watched Oprah show episode in the history of The Oprah Winfrey show happened in 1988. It was not Tom Cruise jumping on the couch. It was not ‘you've got a car.’ It was an episode called Diet Dreams where Oprah had lost 67 pounds on a diet. She did it with a product called Optifast, she talks about it on the show.

Ben: Mostly fasting. When she occasionally did it it was Optifast.

David: Yeah, exactly. Super not healthy. We'll talk about all that in a sec. It was crazy. Literally, 44 million people watched this show. The big over-the-top moment in the show was halfway through she brings out a wagon with 67 pounds of animal fat on it to say I was carrying this around. It's laughable and very problematic in a lot of ways thinking about it now. But think back. She was a friend, she was celebrating. I just went on this diet, I lost all this weight.

Ben: Here I am in my size 10 jeans. I’m feeling so good. I want to celebrate with my friends.

David: Yeah. 44 million people watched it.

Ben: So crazy.

David: So, so crazy. They start getting letters from people from all over the country.

Ben: By the way, that's a live number. There was no DVR, there was no YouTube, 44 million people tuned in during that hour to watch that concurrently.

David: Nowadays, probably Tom Cruise jumping on the couch clip has over 44 million views I would guess on YouTube these days, but that's over 15 years. This was 44 million people.

Ben: Think about America, what does America have population-wise at that point? Maybe 320 million people?

David: No, less than that. Less than 300 million at that point.

Ben: What is that? Probably 1/5 or 1/6 of the US tuned in to watch that episode simultaneously.

David: Unbelievable.

Ben: This isn't the Super Bowl, this is a daytime talk show about a woman who lost weight. By 1988, it wasn't just a woman who lost weight, it was our Oprah. It was our person in this personal quest that she has been on that she's sharing with us.

David: That's the thing. Obviously, there's a lot that's problematic, terrible, and gawkish about that. It's super complicated but it's real. That's the thing. It's real. That's who Oprah is.

Ben: Let's touch on that now because I think Oprah has some quotes looking back on this that are worth mentioning. The top one is, “I actually thought at that time that being thin made me better.” She talks about how 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,” I’m editorializing this really buzzy story of is she fat, is she thin?

Of course, she's a person so she's going to (I don't know) struggle with this is the right word, but fluctuate, she gains weight, she loses weight. The fact that she introduced it in such a big public way it’s that story that people want to write about in the tabloids over and over and over again every time her weight changes. She gave them, as she says, on a platter.

It’s a tough thing to tie your self-worth and your physical appearance like that. I think that this is young Oprah sort of flexing in a little bit like look what I can do, look how awesome. All power to her for doing something that is incredibly difficult, but I think the older, wiser Oprah later looks back and is just clearly so bummed that she opened up in that particular way.

David: Yeah, 100%. Let's also be honest here, Oprah, as I think we've hopefully described here, is an exceedingly once-in-a-generation sharp media businesswoman. She certainly knew that by doing this she was going to get these ratings. By handing the media this story, while certainly painful and all that, she just guaranteed the next 20 years of headlines about Oprah's weight. Again, super terrible and problematic in lots of ways, but Oprah's in the headlines.

Ben: Oprah knows what will play.

David: On the back of that, actually, it was a little before. In 1987, I believe it was the last year of the original contract with King World. I think it was originally a two-year contract, or maybe it was a three-year and it went into 1988 but they negotiated in 1987. She earned $31 million in royalties and salary from the King World contract in 1987. That's when she and Jacobs decide all right, it's time to put the mogul plan into action.

Ben: Think about when she was just employed by the station, she was making $200,000. Then she got, I don't know how much more but hundreds of thousands of dollars more with a better agent when it was still just the station. The syndication deal, obviously, that's when you get that one maybe even two orders of magnitude jump into this $31 million that year from being in 100 and however many markets. What next?

David: What’s next is, all right, it's time to own the production, it's time to start a company, and it's time to build a studio. They buy the show from WLS—they buy The Oprah Winfrey Show or at least the rights to it. They negotiate directly with King World. They invest $16 million of Oprah's own money to build a state-of-the-art production studio in Chicago, and they're going to produce. They're going to make not only The Oprah Winfrey Show but a lot more media content, too, and they're going to sell it.

Ben: $16 million dollars of her own money. This isn't the Oprah we know today that has over $2½ billion dollars. This is Oprah that for the very first time last year made $30 million, but she just knows the trajectory that she's on. She's like you know what, let's put it all back in. Let's buy this thing, let's own this thing, and let's build this thing.

David: This is when they found Harpo Media. Harpo, of course, is both Oprah backward and the husband of Sofia's character in The Color Purple. They found Harpo Media. Oprah owns 80% of it, Jacob owns 10%, and King World gets an equity stake of 10% as well as part of this negotiation. In doing so, Oprah becomes the first black woman and only the third woman ever to own a production studio. Remember, this is the power broker club of the media industry. The first two women before her were Mary Pickford and Lucille Ball, but both of them, of course, owned their studios with their husbands, Lucy and Ricky.

Oprah is the first woman that's solely independently doing this; first black woman. There's no board, Oprah controls everything. Again, they start pumping out other content. The first other project besides The Oprah Winfrey Show it's called The Women of Brewster Place. It's a made-for-TV movie. They know their audience, right? Kind of just like Dennis, back in the day, the original having inkling that this is going to work, they have an inkling that a made-for-TV movie targeted at women is going to work.

They pitch it to the networks, the networks don't want it. They want to air this in primetime on the big broadcast networks. The networks don't want it. Oprah basically forces ABC because she has this relationship with ABC and Cap Cities. I think Bob Iger might have been running ABC entertainment at this point, so basically forces Bob, if he was, to take it. They run it kind of like all right we're doing this to appease Oprah. It becomes the second highest-rated TV movie ever. It turns out, a made-for-TV movie. I don't know how many people watch the Hallmark Channel, it's a good idea, or OWN (Oprah Winfrey Network).

Ben: Or Lifetime.

David: Or Lifetime. This is a good idea.

Ben: Of the things we're going to keep coming back to for Oprah, she's got an eye for what's going to work. She knows what will play, she knows her audience, and she knows America as an audience. We're going to keep touching on control, we're going to keep touching on her drive to be big. She obviously has this gift of how to speak to people, but she has a real gift for just knowing what will land and how big it will be.

David: This is the first one. What did she do, then, to build on that? What does she know is going to resonate? Harpo trademarks the slogan Live Your Best Life. They start selling notebooks and scented candles with Live Your Best Life and sold by Harpo. It's like the Disney flywheel hare, all within Harpo.

This is great, she writes an autobiography, and by all accounts, she actually wrote this autobiography. She had a deal with Knopf Publishing house to publish it. Oprah's such a genius. She decides at the last minute she can't publish it. It's going to be too painful to my family. That just generates more media for her than if she had actually published it. It was the most anticipated book of the century and then she didn't publish it, which just made the myth even stronger.

As a consolation prize, she says to Knopf, okay, I didn't do this but I'll do a cookbook with you. They published a book called In the Kitchen with Rosie. Rosie was her personal chef. I’m pretty sure it becomes the fastest and biggest-selling cookbook of all time.

Ben: Amazing. It's especially amazing because Oprah's brand around that point isn't even like I know food. It just happens to be that—

David: There is the whole diet thing. I think she has the tie-in with Weight Watchers at this point.

Ben: Right. But the whole Rachel Ray relationship hasn't begun yet, right?

David: No, that hadn't begun yet. I think it was one of her producers, Alice McGee, comes up with the idea in 1996, a few years later of, okay so this cookbook thing works. She's always had authors on the show and she recommends their books. It leads to a lot of sales. People used to joke that where Oprah held the book was an indication of what the sales were going to be. If it was in her lap, it was a dud. If it was like at her waist, it was like eh, okay. If she held it up by her face that will—

Ben: What if she holds it up like a bible?

David: Yeah, exactly. Oh, God, let's not go there. That was going to be a bestseller.

Ben: Sorry, I had to.

David: You had to. They had the idea on the show. What if we launch a book club? In September 1996, they launched Oprah's Book Club with Toni Morrison's Song of Solomon as the first book. The idea is they're going to announce a book, give the audience a month to read it, and then they do an episode with the author. That year, they are directly responsible, and they do special Oprah Book Club editions of the book, for $130 million in book sales in literary fiction in 1996, which is many more times sales than the entire genre category had had in the years before. Such a brilliant business idea.

Pause. Announcement for the LP Program. This is our big reveal. We're going to launch the Acquired Book Club. It's going to be part of the LP Program. The first book is going to be Hamilton Helmer’s 7 Powers. Of course, we already have the episode with the author done. We're going to work out the details but this is for real. Doing this episode we just realized it's crazy that we haven't done this for Acquired.

Ben: In fact, we already have a book club channel that we just haven't used in the Slack in an organized way. You could run a way worse playbook than just copying Oprah over and over and over again in later decades, in different modalities.

David: We'll talk about that in the playbook. Acquired Book Club. It's happening. So here is how it's going to work: Ben and I are going to choose a book time. Interval TBD. Could be every month. It could be every six weeks. We're gonna work that out as we go along. And then depending on the availability of the author, we are going to do either one or both of an LP episode with the author, discussing the book and a LP zoom discussion, with all of you LPs potentially with the author.

If she or he is willing to join us, we are also going to 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 vehicle to get that out to everyone. And then Ben mentioned the book club channel in Slack that has been sitting there for awhile: We're going to repurpose that for use of an ongoing discussion of our bookclub books.

Ben:Yes, we are very excited to, to dive in and we are going to borrow from Oprah in more ways than one. So at the beginning of the episode, David mentioned that you have a box underneath your seat, pick that up and gaze inside… if you have been considering becoming an LP, but haven't yet… well inside that box, should you sign up, is a copy of Seven Powers by Hamilton Helmer, with a little note from David and I!

We just want to send that out to new LPs as a thank you and welcome to the book club. And that will be going out to our next 100 LP subscribers. We also know that lots of you have been LPs for a long time. And so, we were also going to go back through and pick 100 of our existing LPs to send copies of the book to as a thank you. So keep an eye out for an email, if you're an existing LP or a new LP joining. And, 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 we hope you'll join us.

David: Yeah, we hope you will. Okay, back to the regularly scheduled show in progress.

The other thing that they launched in 1996—this is future Acquired, maybe come Christmas time, around Thanksgiving we'll do this—is Oprah's Favorite Things. Oh my God. I did not realize, did you know, Ben, remember UGGs boots? The furry…

Ben: I learned this in the research that Oprah was the queen maker of that.

David: Oprah made UGGs.

Ben: She had some UGGs, she loved them. By the way, the way that Oprah's Favorite Things work, I think it's the first episode of each season was Oprah’s Favorite Things.

David: 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.

Ben: The car giveaway was not random. It was part of a series of things that she started where it was like when I have an idea of a thing that I love that I want to give to my audience, like pajamas, for example, we will just give them to the audience because I want them to enjoy it. UGGs boots were one of those.

David: UGGs boots, amazing. We have Oprah to thank.

Ben: For people to understand the impact of that, this got dubbed The Oprah Effect. The combination of this and the book club. It's almost like the Steve Jobs reality distortion field. The Oprah Effect is when Oprah endorses something and then massive sales come out of that. The book club, in particular, did 70 books over the 15 years of the 25 years of the show. In total, there were 55 million copies sold after Oprah recommended it. Averaging close to 1 million purchases per book that she recommends. 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. Most people read a book a year and for a lot of people, that was just the book that Oprah recommended every year.

The way they that a lot of analysts have worked it out is when Oprah decides to endorse something, that increases the number of people who will do that thing by a million.

David: Going back to the cookbook with Knopf, I don't remember the exact numbers but the story is they were like, “Yeah, we're going to print 50,000 copies or something like 100,000 copies.” Oprah’s like, “That's not enough, that's crazy.” They were like, “We printed the Julia Child cookbook and that's only ever sold 300,000 copies or something.” Oprah said, “You're going to have to 10X your production on this.”

Ben: This is as good a place as any to talk about not only the Oprah Effect, but really what did her audience looks like and try and contextualize those numbers a little bit. At this time that we're currently in the story in the early 90s, Oprah would draw 12–13 million concurrent viewers every single day to her 4:00 PM show.

David: Astounding. That's like 5% of America at that point in time.

Ben: Yeah, and if you look at over the course of a week, the number of unique viewers who would tune in to one of her shows would be 40–50 million. Her effectively weekly active users or weekly audience was 40–50 million people.

There were spikes where—we'll talk about this in a moment—she interviewed Michael Jackson in a very famous interview. The first time he'd been interviewed for 14 years. She did it on-site at Neverland Ranch. That actually got 90 million viewers and any given time during the broadcast it was 62 million concurrent.

David: I believe it was either the largest or maybe the top three—

Ben: It was the largest interview in television history.

David: Yeah, but I think it may have been the largest non-Super Bowl television event in history too.

Ben: Freaking wild. The comparison I want to make here just to really drive this home is people talk a lot about the incredible amount of attention, users, views on YouTube, or the incredible amount of people who watch Esports or video games.

Let's not even take that weekly viewer number of 40–50 and just look at the concurrence on a single show on an average weekday at 4:00 PM. Thirteen million people, the largest concurrent number on Twitch ever was when Drake and Ninja played Fortnight and that was 700,000 concurrent. There was this perfect moment in history where the Internet wasn't a thing yet, so you didn't have the massive fragmentation of all the different creators who would rise up that you could watch. 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. The way we were in this syndication area so you could actually reach a national audience. She shot the gap. She had the right talent and she shot the gap where there was a constraint set of creators, but you could reach a national audience and just had way more influence and more ability to gather people concurrently on a regular basis than anyone will ever have ever again.

David: It is amazing. Today, for influencers, media properties, and everything, in many ways it's so much better. There are so many more opportunities. There's Twitch, there's YouTube, there's Tiktok, there's Twitter, there's a podcast, there's everything. There are blogs, there are emails and newsletters. Oprah only had 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. Yeah, there was Jerry Springer and there was Donahue. Okay, she had a handful of maybe competitors, many of which she ended up co-opting and we'll get into in a sec. Dr. Phil, Rachey Ray, Dr. Oz, these all become Harpo Properties.

Ben: There's no one thing that you can attribute it to, but certainly a driving factor in what helped was the fact that what she valued over anything else was authenticity and the trust with her audience.

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 trashy TV. Even though it can bring immediate ratings, she felt that wasn't the thing for the 25-year friendship that she wanted to have with, frankly, the women of America. And that ability to constantly say no.

There's this wonderful David Carr article in The New York Times. Rest in peace David Carr. I think the title is A Triumph of Avoiding the Traps. It's really about how it's all the things that Oprah didn't do, the things she said no to, and the way she stayed true to herself and her audience that really let her keep that for so long.

Ben: Yeah. A couple of things happened in 1999–2000. It's time for Oprah’s negotiation renewal for the King World deal. They renew it for $130 million a year or what works out to $130 million a year in revenue sharing, plus now, Harpo gets equity in King World. Remember, King World got equity in Harpo originally.

Harpo gets equity in KingWorld as part of this deal. Later that year, CBS acquired King World for $2.5 billion. Oprah and Harpo made a $100 million on that deal in months. I wonder if it's actually with that capital that she then started buying and bringing in other shows into the Harpo Network, Rachel Ray, Dr. Phil, Dr. Oz, many of which she kind of made them originally guest on Oprah Show. They bring in and start producing those shows and owning them as part of Harpo.

The next big thing is in 2000, they partnered with Hearst and they launched O Magazine. It becomes the largest most successful magazine launch in history, 2.5 million copies circulation right off the bat. Brings in $140 million in circulation plus advertising revenue in the first year. The empire just keeps on growing.

A couple of years later, she does a deal with SiriusXM, getting back to the radio roots. Does a three year, $55 million contract to bring Oprah and Friends as a channel on SiriusXM. Does he have a channel or is it just a show? He must have a channel now.

Ben: Good question. Yeah, I don't know.

David: I don't even know if this [...] deal would happen yet, but he had a show. Oprah was like, no, I want a channel that she can also pump content into. That was the next piece of the empire.

Ben: In large part, this is harvesting. We've moved out of the mode. She can't build a bigger audience unless she goes global or unless she decides that we want to start bringing, frankly more men into the percentage of people who are watching my show all the time. She already addresses the women and some of the men of America.

At this point, it's about harvesting that audience and what you can basically do is see her for a long time and say nope, my show is the only way that I reach people, and then her realizing people will pay me for little pieces of all this stuff and I can carve off Oprah and Friends is a thing, but it's only audio and it's a different type of content. You start to see what deals can I cut and what different ways across what channel reach what segments of my audience.

David: And what different media rates can I own and monetize those. We can't not talk about this, too. The other thing in the mid-2000s that she just nails, she just reaches the apex of her power as the celebrity confessional. We got to talk about 2005, Tom Cruise, Katie Holmes.

Ben: Got to do it. You seem really just overcome with love. This a whole new Tom. This is a different Tom.

David: Oh, man. Amazing. So fun to watch on YouTube. But that's actually again, Oprah to kind of being… I don't know how much this was intentional, but this stuff she starts doing on the show is perfect for the Internet.

The old shows were the whole show, it was the build-up to the Fat Wagon, the wagon of fat. But now you get these moments, you get these clips, and then they're going to be posted and reshared and reposted on the Internet.

Ben: Yeah. As much as what we're talking about is like how the rise of Oprah and the dominance of Oprah couldn't have and fortunately for her didn't happen in the Internet world. She did adapt to the Internet world very well, particularly with all these different media rights and her later launching oprah.com and some more stuff we'll talk about today. But the way that she changed the content is exactly as you pointed out, David, just perfect for these shorter YouTube clips and hasn't gone as short as TikTok yet.

But the older episodes, her most buzzy show will be a whole hour-long narrative arc. 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 hour-long show with an audience of mostly white supremacists who was explaining to her why they needed to be this all-white community.

It's an hour of one single topic that's gut-wrenching. She would later have Neo-Nazis on the show. 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.

You're right. This Tom Cruise clip, you can even just pick three seconds, wind it back and forth over and over again, turn it into a GIF. That's the content and I think you're right. She's very adaptable.

David: On this going out on top, she decides that the 25th season of the show is going to be the last and she's going to fully transition to mobile status and she's working on a big deal which we'll talk about in a sec. In the second to the last season of the show, I think this is best most perfectly encapsulated to kick off the season premiere, in the 24th season. They had the Black Eyed Peas come to Chicago to do a big outdoor event. They do this in flash mobs, Internet flash mobs were a thing. They do a flashmob dance. They do a special version of I Gotta Feeling with new lyrics just for Oprah.

Ben: Yeah, will.i.am rewrote the lyrics to the song. His first verse.

David: Yup and they get 20,000–30,000 people to come to Miracle Mile in Chicago. They closed down the streets. They do this thing. Then, everybody does a choreograph flash dance in the middle and it's like the most perfect three-minute YouTube you can ever imagine.

Ben: We will link in the show notes. Oprah doesn't know. It's incredible. Somehow, they told 30,000 people that in Chicago that Oprah didn't know. They actually pulled off, shocking her. The most telling quote that she has is when they do close down the street in Miracle Mile, she asked one of her producers are the Black Eyed Peas really big enough to close down the streets of Chicago, and her producers are looking back at her and are like, yeah, I think they are. She doesn't actually know what the real reason was for closing it down. It's very cool.

David: Yeah, the Black Eyed Peas maybe. Oprah is definitely big enough to close down the Miracle Mile. The show ends in its 25th season in 2010. They do a two-part finale. Everybody's and anybody’s part of it. Will Smith, Madonna, Michael Jordan, Tom Hanks, Tom Cruise of course is back, [...] Katie Holmes at this point. As part of it, Aretha Franklin makes it back all those years after the $100 given out of the window and sings Amazing Grace. I think the last episode was just Oprah in the studio, but the second to the last—

Ben: Was in the United Center.

David: Yeah, pretty amazing. That's the wrap on Oprah the media personality, but the deal she's working on is, Harpo had been an investor in the cable network Oxygen Media. That gets sold to NBCUniversal in 2007.

I assume some of the proceeds from that, she then does a deal with Discovery in 2008, the Discovery Channel, to turn the Discovery Health Channel which is struggling into The Oprah Winfrey Network. The idea is it's going to be a 50-50 JV. Oprah, everything she had been, all the assets she had been contributing to Oxygen will move over. It's going to be her own channel, 50-50 JV with Discovery. I believe in 2017, I think Discovery bought half of Oprah's stakes. They own about 73%–74% and Harpo owns the rest.

The plan is they're going to launch in January 2011 because the King World CBS distribution rates for The Oprah Winfrey Show ran through May 2011. They're going to launch in January and then by the second half of the year, they'll be able to run reruns of The Oprah Winfrey Show along with Dr. Phil, Rachel Ray, and everything. The channel actually struggles for a couple of years after they launched it, but again, Oprah and Harpo tuned in.

Ben: Yeah, let's talk about the channel struggling because what that was is, again playing for the playbook thing, but we talked a lot about this notion of a direct relationship with your audience. Oprah may have been able to reach all those people, but it’s only the email addresses her phone numbers for them. They watched channels that she was on and when she had moved over to a new channel, like Joe Rogan or like a lot of what we're seeing unfold on podcasting now, she doesn't necessarily have an ability to reach out to all those people and say come on over.

The first year is very disappointing and the number of people she can actually reach. I think she has talked about this. She underestimated the power of habit. They were used to turning on ABC at 4 PM and just seeing her.

David: Channel 6, yeah.

Ben: Yeah.

David: That's such a good point. I haven’t thought about it. That's such a good point. The other problem is yeah, they got the Oprah reruns but there's no new Oprah show. There's no reason to tune in. But in 2012, they signed a production deal (Harpo does) with Tyler Perry to bring over some of his existing TV series that he's been working on and also produce some new tv series for OWN.

Ben: OWN is The Oprah Winfrey Network.

David: The Oprah Winfrey Network, yup, with rebranded Discovery Health and that (I think) kind of saves the network. Tyler Perry's The Haves and the Have Nots become a huge hit along with other series that both were existing come over new ones are, If Loving You Was Wrong, The Paynes, For Better or Worse. His empire and that kind of content starts a whole new generation of folks watching OWN.

This is still starting to play out, but the final ultimate media mogul moment which we're going to smile and laugh about here is Oprah makes it on stage at an Apple Keynote Event.

Ben: Probably the worst Apple Keynote at that time. Cringey.

Ben: What's the deal with Apple look like?

David: It's still sort of playing out. I think it was more of an announcement vaporware than anything else in 2018. But Harpo entered into a “unique multi-year content partnership” with Apple. The idea was they are going to bring back Oprah's book club as part of iBooks.

Ben: Isn't Oprah's book club on oprah.com now? She has a smaller version of it that's continued.

David: I don't know what ultimately happened with that, but there's also going to be Oprah interviews on Apple TV+. She's going to conduct interviews. That has been part of I don't think the partnership has played out as intended with the…

Ben: That has been 2½ years.

David: Yeah.

Ben: The other thing is that would have to be a special carved out because she is under exclusive onscreen appearance. Maybe it's only for terrestrial tv.

David: Yeah, maybe it's not streaming.

Ben: But yeah, she's exclusively on screen with The Oprah Winfrey Network as part of the Discovery relationship these days.

David: Yeah. We'll see how that plays out in Oprah's many many iron still on the fire. To wrap it up here in the history and facts, Oprah achieved her goal. Today, Forbes ranks Oprah as the sixth wealthiest black person in the world. The wealthiest black woman and the 10th wealthiest self- made women in the world. The crazy thing is we'll get into this in a sec, but I think the way Forbes values her wealth is dramatically undervaluing her. I suspect it's a lot higher than that.

Ben: There's an interesting thing where in 2009, it was estimated that she was worth $2.3 billion. It's sort of easy to understand how she got there where she basically had this ramp from making $35 million in 1988 all the way up to making $200 million-plus a year by 2008. That was every time she gets to re-negotiate a deal a little bit more in her favor, her audience continued to grow until it plateaued in the late 90s. But she got better and better terms each time all the way until the show ended.

It's easy to understand how she/Harpo accumulated over $2 billion. What is not clear is in all these deals that she's doing now, almost all of them are impossible to know the terms other than the Discovery deal. So in the last 10 years, you don't really know. Forbes certainly doesn't know exactly how to estimate Harpo Enterprise's value, Oprah's net worth so we're still in the same mid two's number that everyone's guessing at.

David: 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 estimate Oprah had gotten from Harpo over the last 20, 30 years. Well, that doesn't make any sense. Anybody who knows how to value a business is you value them based on the discounted stream of future cash flows.

All that to say, there are all these properties now that Harpo has their hands including a massive cable network of which they own a quarter, 25%. Also in 2015, Weight Watchers, the company was struggling. Did you find this, Ben?

Ben: Didn't Oprah buy 10% when it was really struggling at nice terms.

David: Like $30 million.

Ben: But then she was like oh, I'm going to be a brand ambassador. In large part, due to her becoming a brand ambassador, her leveraging herself, she massively grew the value of that company.

David: Massively. It's estimated to be worth half a billion dollars now. That stake alone that she paid $30 million 4–5 years ago. We don't have the time to do that investment banking style, some of the parts valuation analysis on Harpo and the Oprah Empire, but there's no way that it's only $2.5 billion. It's way more than that.

I think this episode belongs in the whole broadly affiliated Disney Saga because of all the ABC and Cap Cities connections here, but we're talking about the Marvel Deal, the Lucasfilm deal, the Pixar deal, all these companies that Disney bought. If Disney were to buy Harpo—that's not a crazy idea that Disney should buy Harpo at some point, especially as Oprah becomes older—think about what they paid for it. Let's just take Lucasfilm. They bought Lucasfilm, which is essentially the Star Wars franchise, The Indiana Jones franchise, and ILM.

Ben: And no new films in development.

David: Yeah, no new films in development.

Ben: Just the IP.

David: For $3.6 billion?

Ben: Something like that.

David: Now look at Harpo. You've got all the library of these rights to all of these shows. Imagine Disney+. How valuable is the entire library of The Oprah Winfrey Show?

Ben: Oh, I hadn't thought about that.

David: Not to mention Dr. Phil, Dr. Oz, Rachel Ray, all this stuff.

Ben: Is it all on YouTube right now? Like all the old Oprah shows?

David: I don't know.

Ben: What's the back catalog of The Oprah Winfrey Show worth? That’s a good question.

David: Clearly, the back catalog of something like Friends is worth a lot these days. It's a sitcom, not a talk show, but I think a lot of people would like to watch the back catalog of Oprah.

Ben: There are at least 30 or 40 episodes that must still get a lot of views.

David: Yeah. There's all the streaming rights, and YouTube rights, and everything associated with that. Then you've got stuff like O the magazine and all that stuff. Then, you got all the new content that Harpo's producing like Tyler Perry's content out there. Then you've got the stake in the cable network itself which is extremely valuable. This is many billions more than a $2.5 billion deal if Disney or somebody else comes along and buys Harpo.

Ben: Some other interesting things as we tie up our history and facts here. Oprah, by the numbers stats here, over the 25 seasons, the show received over 20 million letters. Lots of different ways to gauge fandom here, but 20 million, and this is page views, not unique users.

But 20 million times, people were strong enough fans to write a letter in. An interesting thing to think about this is if her reach was 50 million people, you sort of assume 1% or 2% of your fans could be superfans. I think a lot more than one or two percent of her reach were superfans.

David: Yeah. I mean, 20 million YouTube comments would be a lot. Imagine the barrier to actually writing a letter and mailing it.

Ben: Yeah, it's crazy. I guess the point that I want to drive home here is yeah, she had reach, but she had a really really intense fandom at that point and still today. The other place I want to take this that we didn't touch in history and facts. I just want to plan a little seed with people.

Oprah, based on her ability to compel people not through strong, ‘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 of people go read the book, or I'm wearing these pajamas and I think they're good, and a million people go buy the pajamas, at some point, she said this person, Barack Obama is truly inspiring to me. There are many research analysts who say he got a million votes in a very tight election that can be credited to Oprah.

There's a whole story that we don't have time to go into around Oprah not wanting to be political and not wanting to have either candidate on the show from the 2008 election. But 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.

David: That is a whole nother podcast worth of content for another show. But just as an example. Oprah never had political guests on her show before the 2000 election and then she had both Gore—

Ben: In which she gave equal airtime. One episode did Bush and Gore.

David: One episode to Bush and Gore. Before those episodes, Gore was leading Bush by 10 points on the polls. They came on, Gore did fine, was kind of stiff. Bush comes on and he gives Oprah a big kiss. He gives Pralines to the whole audience. He crushed it. He did great. Eleven point swing. Bush goes from 10 points behind in the national polls to one point ahead just on the back of the Oprah appearance.

Ben: Pretty amazing.

David: Yeah. Let’s move into analysis.

Ben: Obviously, this isn't a classic Acquired episode where Facebook buys Instagram. We value if that was a good use of capital. The transaction that we're going to analyze here is Oprah spending the $16 million of her own money to buy out the rights to produce her own show and own everything outright with the 10% for King World and the 10% for Jeffrey Jacobs and what that ultimately turned into. Obviously, we're [...] pretty favorable here, but that's how we're going to think about dimensionalizing what we are analyzing.

David: We talked about rather than doing narratives or acquisition categories since there's no acquisition, but what category is actually a good one, and specifically a tweak on a category in honor of our book club, Hamilton Helmer and 7 Powers is let's talk about what's the power for Oprah and Harpo. What's the defensibility? Maybe especially in this new influencer world that we live in where she's not the only influencer out there.

Ben: The question is, would Harpo have the majority of its future economics if not for the relationship between tens of millions of Americans and Oprah that comes from the past? I'm tempted to say that the biggest value driver for Harpo is continuing to monetize a relationship between Oprah the human and a quarter of America. We can talk about what powers that fit into, but you have these other properties that aren't Oprah-specific like Dr. Oz, Dr. Phil, and Rachel Ray.

David: But they're still Oprah brand, kind of.

Ben: Right. I think the main value driver here is people trusting Oprah and wanted to continue that relationship.

David: I totally agree with you. That trust, that relationship with the concept of Oprah that so many, not just Americans but people around the world have now, does Oprah need to be alive for that to be the case? Clearly Walt Disney doesn't need to be alive for…

Ben: For me to want to fly to Disneyland several times a year.

David: Right. Of course, that’s different like Mickey Mouse doesn’t die. It’s different. It will be interesting. Hopefully, Oprah would be with us for many, many, many years to come.

Ben: Let’s take mortality out of the equation and let’s just say whether she’s in the equation or not. Could she sell Harpo for $5-$10 billion? And you don't have the rights to me anymore.

David: I’m just going to be on promise land, my ranch. By the way, the promised land, I can’t resist. In Montecito, one of if not probably top 5 or 10 highest-valued real estate properties in the world is a five-mile-long driveway. It’s amazing.

Ben: You know who else has a place in Montecito is Jeff Jacobs. He has a $16 million, more modest estate nearby.

David: More modest estate, understatement of the century.

Ben: It reminds me that The Big Lebowski is a more modestly priced receptacle.

David: On that note, what’s interesting with what Harpo, Oprah, with OWN, and with the Discovery deal done since ending the show is I actually think it’s a lot more viable that the value of Harpo continues without Oprah being actively involved now than that would have been 10 years ago.

Let’s just look at OWN—the network—it’s not really just Oprah’s properties there driving that anymore, it’s Tyler Perry’s properties that are driving it. Like I said, it’s probably the biggest one. I was going to say O the magazine and there’s more in that. I haven’t spent enough time with O the magazine to know how much of it is Oprah these days versus other stuff.

Ben: Like The Oprah Winfrey Show. It has good circulation for a magazine, but it’s de minimis, relative to modern Internet properties. What I’m going to say here is if I was to apply Hamilton Helmer power, I guess it would be a cornered resource where Oprah is a cornered resource. We’ll get to this in grading. Harpo is worth a crap ton with Oprah and I think a lot, lot, lot less without her.

David: Yup. Interestingly though, I was also going to say cornered resource. In the older era of The Oprah Winfrey Show and the early days of Harpo, it was two cornered resources, it was Oprah, but it was also the syndicated distribution deals that were a cornered resource because it’s not like there could have been another Oprah out there. There probably were other people who are just as talented as Oprah, but unlike today where anybody can turn a selfie camera on, back then, it was such a barrier to entry to have those distribution deals in place that nobody could [...].

Ben: Yeah. You bring up this other concept, too, David. This exists with any influencers today. There’s a network [...] effect within the audience. There really is a critical mass thing that happens where if you could watch Oprah, that was doing all the exact same things that Oprah was doing or you could watch someone identical to Oprah that no one’s ever heard of and your friends weren’t talking about, and other people wouldn’t be reading those books, and other people wouldn’t be buying those products but still had the same charisma, amazing guests, you just would never watch that one because you want to be a part of the cultural zeitgeist that Oprah is creating. In some ways, it’s an audience network effect.

David: The obvious modern-day analogy to all these is the Kardashian empire. The Kardashian-West empire now, combined. This kind of federation and the way influencers were today is it’s not just one person. It’s a career. You got Kim, you got Kanye, you got Kylie, Kylie’s got a cosmetics brand, Kim’s now doing a podcast with Spotify. I will talk more about this in Playbook to come. There’s really something to this audience network, but it’s now a federated network across influencers.

Ben: That’s true, yeah. You have to imagine there is an audience overlap between Dr. Phil, Dr. Ross, Rachel Ray. The different jobs to be done in a shared audience by each of those creators in the same way that there are influencer cadres that each serve a different job to be done for the same person in the audience. You got to think Oprah is on her way, too, but if you can successfully build that, then that’s how Oprah can make her exit from it and it retains value on its own.

Let’s go to what would’ve happened otherwise. What if Oprah didn’t spend $16 million and kept working for WLS? First of all, she might have stayed as important in the cultural zeitgeist, but I think it’s telling this is also in the podcast you referenced at the top of the show that Oprah felt like she was doing wrong by other people at the station by being so successful. When she would see people in the elevator and all their shows were fine but not nationally syndicated and she was the queen of television, it created cultural problems at the station.

She talks about how she felt that she needed to bring the Oprah Show into its own physical space just to detangle from all the existing incentives that existed for everyone else in the building. The easy thing to say is she never would have become the mogul with the power that she has today. That’s really what she wanted. She probably wouldn’t have felt that she was doing right by herself, but it’s also hard to guess what the unintended side-effects were of staying in that station.

David: I have to imagine that if we would ask Oprah this question it would be like everything is so much better. I can’t imagine she regrets that decision one iota. I think a lot of that, though, is just her own ambition. The alternative universe is she looks like what most movie stars looked like, is talent. Yeah, maybe they have their own “production studio” but they’re not really doing the...

Ben: They’re getting the executive producer credit for fun.

David: Yeah, right. Exactly. That’s just like for getting some extra points on the deal. Really, they’re just talent and not entrepreneurs. Oprah has decided to become an entrepreneur.

Ben: Yup. That’s a great way to put it.

Okay, playbook. For folks who are new to the show, in this section, we basically say 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 what are the themes that we noticed that lead to their ability to pull this off?

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 I was shocked by when I did the research. I shouldn’t have been shocked, but I was, and that is the car giveaway where she gave away 276 cars, totaling $8 million and they were Pontiac G6s. In my head, that’s not what they were but that's what she gave away. I thought this whole Oprah’s giveaway thing is she’s so rich, she doesn’t need to be rich, she doesn’t care about being rich, she loves her audience so she buys some things. That’s not at all what happened.

David: No. Pontiac gave the cars away.

Ben: Yeah. Pontiac spent all the money and they were like, this is well worth it for our advertising. Are you kidding me?

David: Well worth it.

Ben: It took us some effort to get them up from 25 cars all the way up to the 276 by their producers. This was Oprah being like, wait a minute, I can give stuff away that other people pay for. That is the thing that you see across the whole YouTube ecosystem now of sponsored products.

David: Marquez just did a sponsored video with Buick. We didn’t give the Buick away, but you do an unboxing of a Buick. That’s the legacy of Oprah right there.

Ben: Right. I just wanted listeners to know that Oprah didn’t actually buy all those Pontiacs. Pontiac did it. You can buy one Super Bowl ad slot for a million bucks or you can buy eight and have us all still talking about “you get a car, you get a car, you get a car.” Legendary ad deal is a way to think about that.

David: At the end of the day, all those audience members got the cars. They still had to pick because it was a gift that paid taxes on, it’s complicated. They could get the net cash or the key of the car and pay the taxes.

Okay, for Playbook though, let’s spend a sec and talk about super clear analogy as we talk about all along between Oprah being the first influencer now into modern influencers, like we mentioned, Marquez, MKBHD and all these YouTubers, then you got the Kardashian-West empire out there, you’ve got George Clooney, and Casamigos with this tequila brand. I don't have any well-formed thoughts here yet, but 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.

Ben: You don’t have to cut the deals, but you do still need to spend something to get distribution. It might be spending on honing the content. Even though your stuff’s freely available, you have to figure out a way to make it occur to people that they should—

David: That’s what I was getting to. The gatekeepers are gone, but long live the gatekeeper. The gatekeeper being like, you got to rise above the noise and create something compelling that’s going to get people’s attention and be worth watching among the sea of all the content out there.

Ben: Yeah. The gatekeeper is the lack of scarcity. Now that there are no gatekeepers, there are hundreds of millions of people creating content and rising above that. 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. When you see the influencers emerging from YouTube and going on to more classic mediums, the ability to buy in bulk and have predictable economics is still beneficial.

David: Two quick things I want to say. One is what you talk about with the cars, I just want to label that as a Playbook theme which is for this type of business, for an influencer business, monetizing your product recommendation, kind of like native advertising. This is the first native advertising that happened. That is a great business model for this type of business.

The other thing about how this is all involved looking at it is Ben Thompson’s written about this ad nauseam so we won’t deliver the point, but Oprah worked and Oprah can be the best. She was mainstream, she appealed to just about every woman in America but lots of men, too, massive, big, wide lenses. Now, you don’t have to do that with the Internet. You can hire and get a niche audience. You can have influencers in business technology, like us. You can have influencers in anime culture.

Ben: I was really hoping to get through this whole thing without you ever labeling us an influencer.

David: Okay. We got to stop.

Ben: No, but you’re right. If you think about the ways that influencers monetize, yeah, there’s this native advertising paid placement type of thing, there’s the notion that you’re going to create really intense fandom within a niche. She’s had a freaking huge niche and there weren’t a lot of other people competing.

David: The niche was women.

Ben: Yeah. She’s able then to carve that audience up as more channels emerge into more niche down versions and then monetize the niche in a different way through the magazine, through the website, through YouTube use, through whatever else. Yeah, those are good themes.

David: Nobody was ever going to make a nationally syndicated television show about the business and technology in 1986, but now, the Internet.

Ben: The way that I label this theme is she had the perfect timing where you could reach the national audience, but everyone couldn’t reach a national audience and this could never happen again. You can never reach an audience this wide, rise up this quickly, and have the intense type of fandom that she had ever again.

The other one that I just really want to really call out is the benefits of the zero marginal cost business. From a Forbes profile that is linked in our show notes, we have the 1994 economics of The Oprah Winfrey Show where the show grows to $196 million and Harpo is paid $100 million of that. We know what the revenue share looked like with King World. Oprah made $74 million of that $100 million, personally. Already by 1994, she was making $74 million a year. Let’s pop back up to that gross revenue number, $196 million. Show only cost $30 million to produce.

David: Wow. That’s some good EBITA emergence right there.

Ben: What is that? It’s an 85% EBITA margin? I guess it depends what you say production costs are, if that’s a gross margin or if that’s a net margin. In either case, an 85% margin is amazing. 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. For every additional person she added that watched the show, she got one person’s worth of revenue. But it didn’t cost an additional dollar to get that person. Holy crap, that’s good business. It’s interesting that they were able to produce something with four people that then scaled up to hundreds of people to produce it, but still, their audience was so big that the revenue massively outran the cost of the show.

David: This was the whole thesis of technology, software, and venture capital up until people started to realize that you can also build tech-enabled businesses with low gross margins in the real world. Which of course, you can. This is why the media and technology businesses are so linked. They are zero marginal cost businesses and when they scale, they just create beautiful, beautiful business and economics.

Ben: Yeah. Also, [...] and say I think this is a gross margin because at the very least, Oprah has to pay herself out and that’s going to even the EBITA margin.

David: You got to pay the mortgage on the promised land.

Ben: That’s right. The amazing economics of a media business if done correctly. Much like a software business. A pure software business capped fixed cost and potentially unlimited or zero marginal cost created unlimited upside.

David: Tom Murphy and Dan Burke of Capital Cities were among the first to realize this.

Ben: Indeed.

A good time to move into value creation and value capture. Oprah created a ton of value in the world, manage to capture a lot of it. Let’s talk about if what she did was good for the world. This is something we started doing after our Uber, Lyft episodes. Oprah, pretty undeniably, is good for the world. It’s hard to find an area where gosh, Oprah making all this money, it was actually bad for the world that she was in business.

The interesting question that I’m noodling on is, she’s got billions of dollars now and a lot of it is tied up in Harpo, it’s not like she has kids. What is she going to do with all that money? She’s donated a lot to charities, she probably will continue to donate hundreds of millions, if not billions more, but it’s actually an interesting question, let’s say, what will be Oprah’s legacy?

David: I hadn’t thought about this until 15 minutes ago in the show, but it’s directly tied into what happens to Harpo in the future. At some point, there needs to be a home for Harpo, especially because of this. Oprah doesn’t have any biological heirs right now, she could designate other heirs, but that’s 80% of Harpo. The ownership needs to go somewhere. Somebody needs to buy it or steward it or something. I think this actually points to at some point in the next years to decades, I think we’re going to see a Lucasfilm Marvel-type deal for Harpo, whether with Disney or somebody else. We almost have to.

Ben: Still doesn’t answer the question, though, of what will Oprah do with all the money.

David: She has not signed a giving pledge, I believe, but she did attend the first giving pledge dinner. Certainly, she’s giving away most of the money, a lot of money over the past years.

Ben: It’s interesting because we don't take this angle with other companies. When we did our Amazon episode, we didn’t end on what would Jeff Bezos do with all that money. No other company is so intrinsically tied to a person that we’ve ever covered.

David: Amazon’s a public company. It’s 80% not owned by Jeff Bezos.

Ben: Right. Let’s move on to grading. Right before we do that, we want to thank our final sponsor for the episode, Wilson Sonsini, the official legal sponsor of season six of Acquired. WSGR is the premier legal adviser to technology, life sciences, and growth enterprises worldwide as well as the venture firms, private equity firms, and investment banks that finance them. Thank you to Wilson Sonsini, I’ve done a lot of work with them, they’re awesome. Thank you for sponsoring the grading section of the show, which we’re moving onto now.

Again, for folks who are newer to the show, we basically grade how good of a use of capital was for big co to buy a little co and compared to everything else they have done with it. In this one, we’re grading how good of a use of $16 million for Oprah to buy out the rights for the show. I don't know if it’s an A or A+. At an absolute dollar return, it can’t possibly be an A+, but on a multiple perspective, it might be up there.

David: It’s clearly not an A or A+. We can’t decide which until a transaction like we just talked about happened. Once that happens, then we can say $16 million back 1988, what’s the IRR on that from that point in time to the 80% of the value that Oprah realizes from the sale of Harpo, if and when that should happen.

Ben: Yup. But the bottom line is, it’s incredibly hard to find a better use of $16 million than she did in 1986.

David: Totally. She created a compounding machine with Harpo. That was what you’re trying to do when you’re creating a business, is a cash flow compounding machine. She’s done that and it got her the promised land. Literally, it got her to the promised land.

Ben: For sure. All right, carve-outs?

David: We’ve been in the 80s, 90s moments here. This is great, I’m loving it. I’ve been reading The Dark Tower series by Stephen King, which I always thought of Stephen King as a 90s horror author. The Dark Tower series is amazing. It’s basically, intentionally but unintentionally, his attempt to an American Lord of the Rings. It fits the bill. It’s excellent. I’m about ⅔ of the way through it. It’s probably, 8000–9000 pages in total but so good. It’s about Roland, the gunslinger and many, many other characters along the way, but highly recommended.

Ben: Nice. Stephen King also has a great follow on Twitter. He’s got some fire takes.

Mine’s quick and it’s only going to be quick because if I say too much, it would spoil it. For people who listen to Reply All, I’m going back and listening to some of the most popular episodes that I’ve never heard. If you haven’t listened to Reply All and you like this show, I bet you’d really like that show. Episode 102 and 103, Long Distance Parts 1 and 2 starts with the host getting a phone call from an 1800 number that he thinks is trying to scam him and he picks it up and rolls with it and it goes to an unbelievable place that you would never guess over the course of the two episodes. It’s totally thrilling. For those who 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.

David: Can’t wait.

Ben: Awesome. We are landing the plane, we are bringing home the audience. We hope that you live your best life. If you have some time, 5–10 minutes, we would deeply appreciate you filling out the Acquired survey, we do this probably about once a year to get a sense of how we should make the show better and really what you like about and what you don’t, what we can change and who you are. If you aren’t subscribed and you like the show, we really think you should hit the subscribe button in your podcast player, or you can go to our website at acquired.fm and sign up to receive new episodes via email. You can also join the Slack or listen to any other episodes on there. Without any further ado, thank you to Silicon Valley Bank and Wilson Sonsini and we’ll see you next time.

David: We’ll see you next time.

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