What competition Conan O’Brien will face when he presumably takes over Jay Leno’s “Tonight Show” duties five years from now is not clear, but what is certain is that the late-night audience-the fastest-growing daypart in television-will be even more precious to programmers in 2010.
As insiders considered the value of late-night, they buzzed last week with potential scenarios for capturing the after-hours crowd five long years from now. Among the juiciest: Mr. O’Brien versus the very man he wanted out of the way, as Mr. Leno takes his formidable late-night track record to ABC or Fox. If Mr. Leno does take his act to a competitor, it could represent a grand flip of a big, emotionally satisfying bird at the NBC executives who last week announced a stunning pre-emptive decision to trade in Mr. Leno when his contract to host “The Tonight Show” expires at the end of 2009. NBC’s move makes room for its “Late Night” host Mr. O’Brien to take a shot at 11:35 p.m. stardom.
The Fox-or-ABC scenario is the most extreme of the predictions, and whether Mr. Leno would even be able contractually to make such an immediate leap is unclear. If population and TV trends continue, however, more viewers will be availing themselves of more late-night TV options-including what to record and play back later.
Late-night viewing has risen nearly 40 percent in the past 10 years, making it the fastest-growing daypart in TV. A number of predictable phenomena-from retiring and empty-nesting baby boomers to twentysomethings who bunk with parents, put off career commitments and can stay up as late as they want-are likely to continue to make it a growth center.
The late-night audience will become even more valuable to programmers because the viewers tend to be young or affluent enough to be able to afford a second home or travel.
Bear Stearns media analyst Victor Miller said, “You have to look at what is happening now” in order to get a perspective on five years from now.
A June 2004 report issued by Bear Stearns comparing the relative profitability of prime time (8-11 p.m.) with other dayparts put the year-to-year growth in prime-time revenues in 2003 for the Big 4 networks collectively at 8 percent. Late-night revenues increased 16.6 percent in 2003 to a total of $642 million. Bear Stearns defined late-night as 11:30 p.m.-1:30 a.m.
Those familiar with the financial picture in late-night say NBC last year turned a profit of more than $200 million on the Leno-O’Brien tandem. CBS is said to have made a profit in the neighborhood of $180 million on “Late Show With David Letterman,” the 11:35 p.m. CBS show for which Mr. Letterman left NBC after NBC gave “Tonight” to Mr. Leno. “Late Late Show,” the nearly 6-year-old Letterman lead-out that has been operating without a host since Craig Kilborn walked away in late August, has been described by CBS as profitable. Estimates extrapolated by Nielsen from 2000 U.S. Census data project a larger overall audience in 2010, when persons age 2-plus are expected to number 290.94 million and persons 18 and older are expected to number 225.92 million (compared with 275.58 million and 211.4 million, respectively).
Women still will outnumber men, who became the target audience for late-night broadcasters after Johnny Carson ended his reign on “Tonight” in 1992. The number of men 18-plus also is expected to grow, from 101.54 million this year to 108.81 million in 2010.
In five years, Nielsen Media Research will have the ability to more effectively gauge time-shifted viewing, as well as out-of-home viewing, which will be a particularly tantalizing boon to late-night, daytime and sports programmers. They know significant numbers of faithful viewers go uncounted because they watch their favorite shows at the office, on campus and in sports bars or hotel rooms. Research indicates those viewers tend to watch more television and more late-night TV than they might at home.
The bottom lines: Expect even more aggressive development of cable programming alternatives for late-night, and even more persistent courtships by broadcasting’s late-night have-nots, such as Fox and ABC, for personalities who can establish an instant foothold in the daypart.
With cable and satellite distribution leveling off at about 80 percent of the country, cable programmers increasingly are focused on original programming to drive ratings growth.
At least one aggressive late-night cable strategy already has paid off. Cartoon Network’s Adult Swim block last summer beat all late-night talkers on ABC, CBS and NBC among many under-35 demographic groups by at least double-digit percentages.
On Comedy Central, “The Daily Show With Jon Stewart” has been a key to establishing the network as a varsity player on the late-night and sociopolitical scene. Still, “We’re always going to zig when other people are zagging,” said Lauren Corrao, senior VP of original programming and head of development for Comedy Central. She said the network will continue to target 18- to 49-year-old viewers and to focus on development of programming for late-night. “We have always been poised to program to that audience,” Ms. Corrao said. “Our network is a very late-night network.”
Elsewhere, September proved to be the strongest month in the nearly 20-year history of Nick at Nite.
For the big broadcast networks, late-night hits are valuable not just as national franchises, but as programming that offers affiliates an environment with unique appeal to advertisers. The network program doesn’t have to be a huge hit to be cleared and appreciated by local stations because the affiliates get a more generous share of the ad inventory than they do in prime time.
“You can’t overlook the value of a franchise,” said one executive of a powerful station group.
This all adds up to a persuasive explanation of why Fox, whose late-night flameouts are among the most spectacular (Chevy Chase and Joan Rivers among them), keeps trying to break into the national late-night club.
Reliable sources say Fox, whose owned stations reach nearly 45 percent of the country, and ABC both made overtures to Mr. O’Brien, whose contract was scheduled to expire in January 2006 before the “Tonight Show” deal.
ABC made a run at Mr. Letterman in 2002, offering to dump the venerable “Nightline” for him. Instead, Mr. Letterman made a deal to stay at CBS for five more years and ABC went with Jimmy Kimmel, who was willing to follow “Nightline.”
For Fox, it was the second run at Mr. O’Brien. Four years ago, Fox was prepared to pay the “Late Night” host $25 million a year, a long way from the $8 million a year he is thought to be making after 12 years on “Late Night.”
Little is known about his new deal, orchestrated by NBC Universal Television Group President Jeffrey Zucker, but it is said to guarantee Mr. O’Brien a two-year run on “Tonight” or a penalty of perhaps as much as $20 million.
What is certain is that Mr. Zucker has taken Mr. O’Brien off the market and that every demographic hiccup and any number of ripple effects on the late-night scene will be intensely scrutinized for the next five years.
The clock already has started, thanks to the increasing prime-time strength of CBS and the softer start to the 2004-05 season at NBC.
Prime-time strength boosts late-night entertainment shows, according to Nielsen data. Last season, for example, “Tonight” got a 13 percent boost in total viewers on Thursdays from NBC’s once-invulnerable “Must-See” lineup. “Late Show’s” viewership jumped 14 percent on CBS’s powerful prime time on Mondays and 8 percent on Thursdays, as the network became increasingly competitive with NBC.
Still, at least one exec with experience in the ferocious late-night game, former NBC Entertainment President Warren Littlefield, said change in late-night takes longer than in prime time. Fifty years of history is on NBC’s side in late-night, he said.
“Late-night is littered with wannabes-people trying to grab a piece of the throne,” Mr. Littlefield said. “It’s hard to imagine somebody being able to come in and unseat NBC.”