Did Oprah Really Give Away 300 Cars for Free on an Episode of Her Show?

On September 13th, 2004 media powerhouse Oprah, who by the way’s real name was originally Orpah after the sister of the biblical character of Ruth, made television history when she announced that she was flexing the fact that she is, by definition, “Oprah Rich”, via giving every single member of her audience that day a rather expensive free car. Considered one of the most memorable moments in television history, the image of hysteric Oprah fans screaming and crying while the Queen of daytime TV flailed her arms in the air has become the stuff of legend in the world of marketing, as well as been the fodder for many a meme over the years since. The thing is though, nobody in the audience that day technically got a free car. So what’s the dealio? Let’s dive in, shall we?

First, some background. Exactly who came up with the idea of giving away 300 cars on Oprah that day isn’t clear and we were unable to find any single person at Pontiac (the company that donated the cars) willing to take credit for what is oft considered one of the single greatest marketing stunts in television history. In fact, the lead marketer for Pontiac at the time, Mark-Hans Richer, has gone on record as saying that “there was no creative mastermind” behind the stunt. Richer explains in a lengthy blog post detailing the events leading up to the giveaway that the idea bloomed organically out of meetings to discuss how to best market the newly introduced Pontiac G6.

You see, the G6 was designed to replace a car known as the Grand Am which, according to Richer, was incredibly popular with women. In fact, Richer notes in his blog post that 65% of Grand Ams were bought by the fairer sex around this time. The idea then was to retain this evidently loyal customer base in the highly competitive mid-size car market with a high-profile stunt to persuade women that the G6 was the new car for them. Enter Oprah.

While it’s unclear who first suggested approaching Oprah to promote the car on her show, Richer believes that this fact is unimportant due to the fact it was hardly a novel or original idea, quipping: “Just about every brand in the last quarter century has at some point said to itself, “Hey, let’s do something with Oprah!””

The problem then for Pontiac and General Motors (who owned the brand) was making such a promotion stand out, since Oprah had promoted hundreds of products on her show. This is when an unknown member of Pontiac’s marketing team suggested perhaps doing something with Oprah’s Favorite Things. For anyone unfamiliar with The Oprah Winfrey show, “Oprah’s Favourite Things” was an annual segment usually (though not exclusively) aired around Thanksgiving in which Oprah gave away thousands of dollars worth of free stuff to her guests under the guise that the items were things she liked or felt would make a great gift.  In reality, whether the items were actually among her favorite things or not is a matter of debate. Either way, the items were invariably donated by companies along with potentially ample sums of money in return for gushing praise from Oprah, who at the apex of her popularity commanded an almost unheard of level of influence over her viewers’ shopping habits to the point that businesses she mentioned were often overwhelmed with orders, sometimes so much so that they couldn’t cope with the volume.

The idea then was to make television history by giving away the largest prize on Oprah to date, a brand new Pontiac G6 worth around $28,000 ($41,000 in today’s money).

However, not wanting to have the giveaway be overshadowed by any other gifts, Pontiac’s marketing team made the decision to not have the giveaway occur on the annual Oprah’s Favourite Things show, but on a random show sometime in September. This caused some friction between Pontiac’s marketing team and the company’s executives, who were also initially only willing to commit around a dozen cars to the stunt. Why? Well an internal cost analysis worked out that giving every member of the audience at a typical taping of The Oprah Winfrey Show a car would cost around $7.7 million (about $12 million today) based on estimates that each show was watched by a live audience of about 300 people. Although $7.7 million sounds like a drop in the bucket for a company like General Motors, it was actually more than the entire marketing budget GM had set aside for the car. As such, you can probably see why they were hesitant to spend every penny they’d set aside and more to market the car on a single episode of a daytime TV show.

Now, seeing as we’re talking about the stunt today, it’s evident that someone was able to convince GM executives on the benefits of working with Oprah and on a different episode of the show and the company eventually agreed to set aside the requisite 300 cars for the giveaway. This, as it turns out, wasn’t necessary as the actual show only had an audience of 267 people.

This brings us to Oprah herself who, after being approached about the cross-promotion with Pontiac, to her credit instructed her producers to find people who “desperately needed” a car to fill out the audience for the giveaway episode. This dually was just a nice thing to do, while also ensuring the audience’s reaction would be through the roof.

Oprah, in what has been called “a masterful display of showmanship”, subsequently spent the entire episode whipping the audience into a frenzy, initially giving away 11 cars to random members of the audience before revealing that she had only one more to give away. At this point, models carrying boxes filtered into the studio and began handing them out as Oprah informed guests that if their box contained a key, they’d won a car.

Oprah herself would later note that she wasn’t exactly all that clear in her instructions and the initial audience reaction was somewhat muted as, to build suspense, as alluded to, she’d lied and said only a single box contained a key. This, at least according to Oprah, is why she began screaming and pointing around “You get a car! You get a car!” at random members of the crowd.

In her own words:

“Prior to that moment, I had said, ‘Open up your boxes. One person has a key.’ So when I looked at the faces of the audience, they go, ‘But I have a key… but she has a key,’ so that’s why I said, ‘You get a car! You get a car!’ to try to clarify, because they all looked so confused. Everybody gets a car!””

What followed were scenes of hysteria as members of the crowd visibly broke down in front of camera and began weeping giant salty tears of joy at the idea of getting a brand new Pontiac G6. As marketing experts would later note, Pontiac couldn’t have made a better ad for the G6 if they’d tried.

Further, as a sort of fun fact, these G6’s given on Oprah also each had custom license plate with the word “Oprah” on it followed by the individual audience members seat number.

Almost immediately after the show ended, though, members of the audience were quickly snapped back to reality by a representative from General Motors handing them a 1099-MISC  tax form. You see, technically the cars weren’t a gift at all, but a prize- an important distinction because while gifts (up to a certain value) usually aren’t taxed in the United States, or more aptly the recipient isn’t taxed, prizes are. Or to put it another way, every member of the audience had just randomly been given $28,000 worth of something they had to pay taxes on.

While what this meant for a specific individual varied, as a result, every member of the audience had to pay in the ballpark of $6,000 (about $9,000 today) if they wanted to keep the car, with, as noted, some being liable to pay more and others less depending on their individual financial situation and the state they lived in. As you can imagine, for an audience of people who were specifically chosen because they “desperately needed” a car, this wasn’t something pretty much any of them had the ability to do.

Things would have been even worse given sales tax and license fees, but General Motors had agreed to pay both of these things for each car, helpfully saving each audience member about $1,800 each.

Still, the idea of paying an additional $6,000 to keep a car they had supposedly just been given for “free” didn’t sit well with some audience members who took their grievances to the press. When a member of the press reached out to Harpo Productions Inc (the company who produced The Oprah Winfrey Show) for an explanation, a spokeswoman didn’t exactly assuage anyone’s complaints when they matter-of-factly laid out the following options for the audience members: “Keep the car and pay the tax. Sell the car and pay the tax with the profits. Or forfeit the car.”

As you might imagine given the specifically targeted demographic here, the audience members took the second option, choosing to simply sell their car the moment they got it and either pocket the profits or, in some cases, using it to buy a cheaper car.

Speaking of which, contrary to what the show implied, nobody on The Oprah Winfrey Show got a new car that day, with each member of the audience having to fill in a form and wait to have their new car delivered to a nearby Pontiac dealer.

Going back to many people selling their new car and just taking the cash difference after taxes, Pontiac themselves weren’t thrilled with this series of events, nor how well covered it was in the media, but were unable to do anything about it as they’d signed away creative control to Oprah and her producers. As a result, Pontiac had to sit and watch as an Oprah representative basically told people to sell their brand new Pontiacs to pay their taxes and buy a cheaper car if they wanted…

There was a positive for future giveaways, however. As a result of this whole snafu, for subsequent similar giveaways, producers began handing out checks to cover the estimated amount of tax audience members would be expected to pay on whatever their prize was. When asked to elaborate on this by the New York Post in 2010, an Oprah representative simply noted that the the show makes: “A good faith estimate of the tax due for each audience member and pays this on their behalf.”

In keeping with this idea, for the 25th and final season of her show, Oprah took her entire audience on an all expenses paid trip to Australia. To ensure there’d be no controversy, the Queen of daytime TV made sure a tax expert was on hand to walk every audience member through the amount they’d have to pay and had a producer cut them all a check for the relevant amount. Because that’s just how Oprah rolls. Being Oprah Rich has its perks.

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