Oprah Signs XM Satellite Radio Deal

Oprah Winfrey is launching her couch into outer space.

The billionaire talk show host announced Thursday that she had signed a three-year, $55-million contract to oversee a new channel for XM Satellite Radio Holdings Inc. and its 6 million subscribers.

Called “Oprah & Friends,” the channel will be more friends than Oprah, whose on-air commitment is one half-hour show a week for 39 weeks a year.

During a conference call with reporters, Winfrey said she and longtime friend Gayle King would engage in “girl talk” on that show. Winfrey added that she would oversee programming decisions at the new channel.

The rest of the programming would include the menagerie of advice givers, friends and self-help gurus who contribute to Winfrey’s television program and her O magazine.

“This is really about them more than about me,” Winfrey said. But, she added, “I’m sure I will pop in and out of everybody’s shows.”

Winfrey, whose net worth is estimated by Forbes magazine at $1.4 billion, will receive no XM stock as part of the deal. But she will receive 50% of the revenue from ads sold on her channel.

The new channel, which begins operating in September, is the latest salvo in an ongoing war between XM and its chief competitor, New York-based Sirius Satellite Radio Inc.

Sirius, which has more than 3 million subscribers, recently unveiled channels from lifestyle entrepreneur Martha Stewart and shock jock Howard Stern.

“When Sirius signed the Howard Stern deal, the obvious question was who else is big enough to move the needle,” said Sanford C. Bernstein & Co. analyst Craig Moffett. “Oprah is big enough.”

The announcement helped push XM’s stock up $1.17, or 4.75%, to $25.78.

Washington-based XM is hoping that Winfrey’s presence will give it an advantage among female consumers, and that her fans will pay $12.95 a month to subscribe.

“Women are an important part of our subscriber base now, and this will solidify our appeal to that market,” XM President Hugh Panero said. “We want to give them even more reasons to buy a car that has an XM radio installed in it.”

Analyst Moffett sees the deal’s effect differently.

“It stretches credibility to believe that people will buy a different car just to listen to Oprah,” Moffett said. “But it’s not unreasonable to believe that she will convince many people to sign up for a subscription if their new car comes with a satellite radio.”

Winfrey will continue broadcasting her television program in more than 120 countries. In addition, her magazine, book club and successful website will also continue to be available.

“Oprah’s television show is both a blessing and a curse for XM,” Moffett said. “People won’t have to buy XM to get their Oprah fix. On the other hand, her television show will be a huge megaphone to advertise XM.”

Winfrey’s agreement with XM does not require her to promote the satellite radio channel on her television show, but she said it was likely she would occasionally mention it on television and in her magazine.

XM and Sirius have been trying to trump each other.

Sirius has pledged $220 million to broadcast the National Football League for seven years, and $107.5 million to broadcast NASCAR. XM is paying $650 million to broadcast Major League Baseball for 10 years.