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Published:February 17th, 2006 12:01 EST
Oprah Winfrey signs deal with XM Satellite radio estimated at $55 million

Oprah Winfrey signs deal with XM Satellite radio estimated at $55 million

By Maria Grella

The two major satellite radio companies, XM and Sirius, have been battling for their lives. Despite none having yet to turn a profit, both are courting major celebrities with high priced deals to lure in listeners. Howard Stern--the self-proclaimed “king of all media”--made recent news with a $500 million deal for two channels on Sirius radio. Now enter XM’s attack: Oprah Winfrey.

Winfrey’s three-year deal for $55 million will launch in early September and is to mainly feature personalities from her widely successful talk show, which include designer Nate Berkus and trainer Bob Greene.

Touted as “Oprah & Friends,” the programs will include fitness, health, fashion and current events topics. Winfrey herself will host a 30-minute radio show on XM once a week with her long-time friend Gayle King, and plans to be involved with the other programs as well. XM is even building a studio in Chicago for convenience.

Analysts agree that this is an enormous move for XM; no one can deny the powerful influence Oprah has on her audience. All products, ranging from her book club to her holiday ‘favorite things’ special, always sell exceedingly well after being featured on her syndicated talk program.

“The Oprah Winfrey Show” reaches 50 million viewers on a weekly basis, in 121 countries. Since she has remained in the public eye for many years, outlasting countless other talk shows, she has become a trusted figure. Her shows not only focus on fun celebrity interviews, but pressing issues and topics for self improvement.

Sirius has managed to scrounge up over 3 million subscribers due in part to Howard Stern’s new programming, but XM radio has pulled out ahead with over 6 million customers. After signing an 11-year deal with Major League Baseball for $650 million, XM’s Oprah deal is sure to attract more female buyers. The announcement comes 4 months after signing a deal with Ellen DeGeneres and Tyra Banks for their new Take Five lifestyle channel. Currently Xm satellite radio has 40 percent female customers. Meanwhile Sirius has been focusing on a mainly male target audience, but is softening their image as well with a $30 million deal to carry programming produced by Martha Stewart and a new channel modeled after the magazine Cosmopolitan.

In addition to reeling in more subscribers, the satellite station hopes to snag advertising dollars as well. The plan is to zero in on those companies who want to reach Winfrey’s target audience. Also helping the companies turn a profit are the exclusive deals with automakers who offer their receivers in new cars. Subscription growth has also been fueled by the prices of receivers dropping 50 percent to $30-$50. The core argument seems to be prevalent, as not everyone is willing to shell out $12.95 a month for a free service, with or without celebrities. Time will tell which satellite company, if any, will turn a profit.