Oprah and Weight Watchers

Weight Watchers and Oprah: Who Bought Whom?

Did Oprah just buy Weight Watchers? Or did Weight Watchers just buy Oprah? Weight Watchers announced Monday that Oprah Winfrey would be buying 10% of the shares of the company, with an option to buy another 5% at a price of $6.79. The value of the stock immediately doubled and Oprah has a profit on paper of $75 million or so. The terms of the deal mean that she can’t take all that cash for five years, so if the lift in the stock price doesn’t hold up, the money is gone.

This makes Oprah the third largest investor in the company. But it’s not unreasonable to think Weight Watchers just paid for promotional services from Oprah with stock and options instead of cash. Promotion deals with celebrities are nothing new to Weight Watchers. They have a string of them in their history: Duchess Sarah Ferguson, Jenny McCarthy, Jennifer Hudson, and Jessica Simpson are a few notable examples.

This deal seems different, but only time will tell if it is transformative. Until recently, Weight Watchers sales, profits, and stock value have been sliding dramatically. Even with the Oprah bump, the company is only worth $400 million today, considerably less than its $6.2 billion value in 2011.

Compare that $400 million to the $475 million that Under Armour paid for MyFitnessPal earlier this year. Apps like MyFitnessPal are tapping into evolving consumer preference for a different approach to weight and health. As Weight Watchers has declined, apps and trackers have prospered.

Maybe Oprah will write a new chapter for Weight Watchers. “I believe in the program so much I decided to invest in the company and partner in its evolution,” she says. Joining their board, she may have the chance to do it. Her influence over consumers is almost unmatched.

This will be fascinating to watch.

Click here to read more in the Washington Post and here to read more in the Wall Street Journal.

Weight Watchers Website Announcing the Oprah Deal, image © Weight Watchers

Subscribe by email to follow the accumulating evidence and observations that shape our view of health, obesity, and policy.


October 20, 2015