Can Oprah Save Weight Watchers?
Media mogul, billionaire, talk show host, actress, producer, philanthropist — and the miracle cure for Weight Watchers? Oprah Winfrey has bought a 10 percent stake in the diet company and is joining its board. The news caused the Weight Watchers’ sagging stock to nearly double in Monday morning trading.
Can Oprah work her magic on the struggling weight-loss business? Here’s what you need to know.
What’s Oprah doing with Weight Watchers?
She’s spending $43.2 million to buy into the business. She’ll also receive an option to purchase an additional 5 percent stake. Oprah will also be joining the weight-loss program and “will candidly share her experiences,” the company said. Oprah’s name and image will be all over Weight Watchers’ marketing.
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"Weight Watchers has given me the tools to begin to make the lasting shift that I and so many of us who are struggling with weight have longed for," Oprah said in the statement announcing her partnership with the company. "I believe in the program so much I decided to invest in the company and partner in its evolution."
What “evolution” is she talking about?
"We are expanding our purpose from focusing on weight loss alone to more broadly helping people lead a healthier, happier life," Jim Chambers, the president and CEO of Weight Watchers International, said in the statement. That broader mission fits perfectly with Oprah’s own brand motto, which promises to help people “live your best life.”
Why is Weight Watchers doing this?
You’re kidding, right? It’s Oprah!
Seriously, though, Weight Watchers has had a hard time getting new members to sign up as more people focus on healthy eating rather than diets and a new generation turns toward free or cheap online nutrition plans, smartphone apps and wearable fitness bands.
Weight Watchers shares peaked at $80 in May 2011 and hit $7 last week. Since 2008, the number of people who attend the weekly meetings has dropped from 1.4 million to 800,000. The company was caught off guard by the rise of mobile technology and hasn’t been able to catch up. Its turnaround efforts so far, including signing a new ad agency and introducing a modernized magazine format, have fallen flat. Sales dropped more than 20 percent in each of the first two quarters of 2015.
Can Oprah reinvigorate the Weight Watchers business?
If anyone can, it’s probably Oprah. While she isn’t the first celebrity spokesman that Weight Watchers has featured — other pound-dropping celeb endorsers include Marie Osmond, Jessica Simpson, Sarah Ferguson, Jennifer Hudson and Charles Barkley — she’s by far the most influential.
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Oprah’s endorsements of various products and books have resulted in instant boosts to sales and popularity. There’s even a term for her far-reaching impact, the “Oprah Effect.” Her millions of followers consistently making purchases based on her suggestions. She’s also famously publicized her weight loss struggles over the years, one of the main ways she’s been so successful in connecting to the general public.
Oprah may not have a daily talk show to promote her favorite products anymore, but she does still have carry plenty of weight, so to speak, with her fans. And by owning a piece of the company, she’ll have more incentive to drive real results than a typical celebrity spokesperson.
“First and foremost, Winfrey brings an unprecedented level of credibility and commitment to a Weight Watchers endorsement,” Morningstar analyst R.J. Hottovy said in a research note, adding that the Winfrey deal also brings “potential marketing synergies” and possibly additional value through Oprah’s existing health partnerships.
That may help explain why Weight Watchers’ stock price closed the day on Monday up 105 percent, meaning Oprah has already more than doubled her money.
Hottovy noted that the Winfrey deal doesn’t eliminate questions about how mobile apps and other technologies could threaten the Weight Watchers business — and that having Oprah on board won’t necessarily help the company attract a younger audience. So whether Weight Watchers ultimately benefits from the deal as much as Oprah does won’t be determined for a while.
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