Rosie O’Donnell’s show on Oprah Winfrey’s OWN was supposed to the a keystone of the network’s ratings. Instead, it bombed and its audience finally settled at barely 250,000 people. The show recently was cancelled. There are rumors of bad blood between the two women. That hardly matters. Winfrey has been unable to find any programs, other than her own, to help anchor the channel. The O’Donnell cancellation was followed by the layoff of 50 people, or about 20% of the network’s staff. Discovery Communications (NASDAQ: DISCA) also placed some of its own management into key executive positions at OWN. The network is in such trouble that it is hard to imagine it will still be running at the end of the year.

Discovery is a well-run company, and its shares trade at $48, near a 52-week high. The entertainment company has a market cap of $18.7 billion, revenue of $4.2 billion and net income of $1.1 billion last year. OWN should not have much of an effect on those numbers. But no corporate management at a public company wants to be viewed as wasteful. The investment in OWN is just that.

Winfrey’s own show, called “Oprah’s Next Chapter,” drew its biggest audience, 3.5 million viewers, with a recent interview with Whitney Houston’s daughter. The show’s viewership has been as low as 500,000, though. It airs twice a week, but even if its ratings were unusually strong, that is not enough to carry an entire network.

One of the most promising signs for OWN is that it is available to 77 million households. As cable programmers have found in the past, the number of homes that can see a show means nothing. It is the number of people who tune in that matters.

OWN was set up to rely on programs beyond Winfrey’s. O’Donnell’s show was supposed to be one of the foundations of those plans. Now that it is gone, OWN will have to find a replacement. There are only so many celebrities that OWN and Discovery can call upon. How many first-tier entertainers want their reputations fouled by poor ratings and a cancellation?

OWN has run out of time. Discovery will soon run out of patience. It has a reputation as a smart entertainment company to defend. And OWN has caused that reputation to erode.

Douglas A. McIntyre

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.