Oprah embraces management-by-instinct, but the method hasn't always served her well. Over the years unhappy former employees have revealed tidbits about Harpo as a less-than-loving workplace. "An environment of dishonesty and chaos" is how one former publicist described Harpo in a 1994 statement accompanying a suit seeking severance and back salary. (That suit was settled quietly two years later.) Oprah has successfully intercepted revelations by insisting that everyone who works at Harpo sign an unusual lifelong confidentiality agreement. "You wouldn't say it's harsh if you were in the tabloids all the time," Oprah says in her defense.

The confidentiality agreement underscores what is both her business' greatest strength and its potential downfall: Oprah's business is Oprah. If she does something as Oprah the person that undermines the trust her customers have in Oprah the persona, her brand could quickly fizzle. It's a threat that Oprah has under tight control. Elizabeth Coady, a former senior associate producer, quit in 1998 and intended to write a book about her experiences at Harpo. Coady calls Harpo, where she worked for more than four years, a "narcissistic workplace." Of Oprah, Coady says, "Everyone undermines everybody else to get more access to Oprah, and I think she encourages it." But it's unlikely we'll hear more details in a book; an Illinois appeals court upheld the confidentiality agreement Coady had signed.

Harpo won't comment on these suits, but Oprah does acknowledge that in the early days she ran people ragged. She says her wake-up call came one night when an exhausted producer fell asleep inside her garage with her car motor running. Luckily the woman's radio woke her up. But Oprah, who believes in signs from above, realized, "We were like overzealous moms who are proud that they do everything themselves, without any help." So she hired a nanny: She brought on her favorite former boss, a TV station exec named Tim Bennett, as chief operations officer. She gave Bennett the go-ahead to build real corporate departments--accounting, legal, and human resources--to make the place run like a real company. Bennett says that when he arrived in 1994, he requested a meeting with his new boss to discuss the capital plan. "What's a capital plan?" Oprah asked. "It's your equipment," he replied. "I told her I needed 15 minutes. Oprah said, 'I'll give you five.' "

Today Harpo has 221 employees (68% are women), modest turnover (10% to 15% a year), and stability at the top. The average tenure of 16-year-old Harpo's ten most senior execs is ten years. The cavernous Harpo headquarters, housed in a onetime hockey rink reconfigured into a maze of offices and production facilities, has an in-house spa and a gym--where most mornings Oprah can be spotted sweating on the treadmill. Pay and benefits are "exceptional," says Debbie McElroy, a headhunter with the Lucas Group who recently tried to recruit a $100,000-a-year personal accountant for Oprah. "Employees get an average six weeks' vacation their first year at Harpo," McElroy says. Two of her candidates met with Oprah, but the boss wound up hiring a friend of a friend.

That's typical. Everything is personal at Harpo. While Oprah does delegate operational decisions, she is all over her content. Before O gets shipped to the printer, she reads every word and scrutinizes every picture--typically working on the magazine, via her office PC, from 3 p.m. to 8 p.m. Tuesday through Thursday and all day Friday, when she doesn't shoot her show. "She's into every little niggly thing--the commas, the exclamation points," says Gayle King, who, as editor-at-large, is Oprah's eyes and ears at the Manhattan-based magazine.

Sometimes her personal desires clash with business demands. O's table of contents runs on page 2 instead of page 22, unusual in a women's magazine. Advertisers would prefer that readers wade through a bunch of ads as they search for the table of contents, "but Oprah said, 'Let's put the readers first,' " recalls Hearst's Black. And when O launched in the spring of 2000, Oprah wanted it to reach all consumers on the same day--just as The Oprah Winfrey Show reaches the vast majority of households at 4 p.m. weekdays. Black recalls: "I had to explain to her, 'Oprah, it's still rolled out by trucks, which go to 185,000 newsstands." Oprah's take on magazine distribution: "It's antiquated."

The success of the magazine stunned Oprah. "I'm most proud of the magazine," she says, "because I didn't know what I was doing." But that's disingenuous. The magazine reflects Oprah's gift for balancing preachiness--her desire "to be a catalyst for transformation in people's lives"--with practicality. And she knew that balance would sell, since it's exactly what informs her TV show, where one day she'll interview Jim Carrey and the next she'll tackle the troubles of oppressed women in Afghanistan. With money, too, Oprah has perfected a certain balance. She doesn't track her costs assiduously, but she's aware of them. She recently saw that the show's production costs had ballooned to $50 million a year--at least twice the norm for a daytime talk show. That's okay, she says, but that's also enough: "I did call [Harpo CFO] Doug Pattison to say, 'I think we can keep it at $50 million,' " she says.

She tries to keep all the number stuff away from her creative employees. "The absolute truth is that we do not worry about the numbers," says Dianne Atkinson Hudson, the longtime executive producer of The Oprah Winfrey Show. "Ratings go down when we do an Oprah's Book Club show, but that doesn't matter. We're getting people to read." Kate Forte, president of Harpo Films in Los Angeles, says that Oprah showers kudos on the staff before one of her TV movies airs. But if it wins big ratings or awards (as several, such as Tuesdays With Morrie, have), the boss is mum. Says Forte: "It's her reminder that we shouldn't do anything for the external reward." Disney's Iger says he wishes Harpo would produce more films to broadcast on ABC, but Oprah's high standards and strict rules (she won't make a movie based on a book that she has endorsed, for example) limit Harpo's output to one movie per year. "Just because there's a buyer," says Iger, "doesn't mean she's a seller."

When she does sell, Oprah's idea of due diligence is to ask one key question: Can I trust you? "She's definitely on a different plane," says Nancy Peretsman, the only investment banker Oprah has ever worked with. Peretsman, an EVP at Allen & Co., met Oprah four years ago when she was King World's banker. Oprah then hired Peretsman to negotiate her investment in Oxygen. "It's all about character with Oprah," Peretsman says. "We investment bankers do the same sort of thing--try to figure out what people are made of--but with Oprah, it's like someone is looking into your soul."

It helps to know what Oprah wants to find there. Hearst's Black won the battle for O over suitors such as Conde Nast and AOL Time Warner by vowing that the magazine would reflect Oprah and her values. Black's partner on the pitch, Good Housekeeping editor-in-chief Ellen Levine, reeled Oprah in by telling her that the magazine would translate her message into "the written word." Oprah adds that Levine "never put me on the cover of her magazine without my permission." And don't underestimate one other factor: Hearst guaranteed Oprah total editorial control.

PAGES 1 | 2 | 3 | 4