May 29, 2009 / 1:00 AM / 10 years ago

Jay Leno's late-night switch a savvy move for NBC

LOS ANGELES (Hollywood Reporter) - If there’s something advertisers, analysts and even most critics agree on when discussing the fall’s launch of “The Jay Leno Show” five nights a week, it’s that NBC has made a savvy business move.

Talk show host Jay Leno speaks next to NBC Entertainment Co-Chairman Ben Silverman (L) during a news conference in the Universal City area of Los Angeles in this December 9, 2008 file photo. REUTERS/Gus Ruelas/Files

“Economically it makes a lot of sense, because certainly Jay is a lot cheaper to produce than the Monday-through-Friday primetime lineup,” says Steve Sternberg, executive vp audience analysis for Interpublic’s Magna Global, a division of global ad agency Interpublic, which buys TV advertising time from the major networks. “And if you think about it, they haven’t had a major hit in a while at 10 p.m.”

The cost of an hour drama typically approaches $3 million, while an episode of Leno is expected to be closer to $400,000 — a weekly saving of $13 million at a time when NBC Universal and its parent, General Electric, have been working hard to cut costs. (NBC declined comment for this story.)

NBC’s daring move also eliminated the threat of Leno defecting to ABC, where he would have been pitted against his “Tonight Show” successor Conan O’Brien.

“They saved themselves from the competition and put him into prime,” says Donna Speciale, president of investment and activation at MediaVest USA, part of the Starcom MediaVest Group (a division of Publicis Groupe, Paris) which provides clients with strategic ad-buying plans for traditional and new media. “They’re doing something different and they lowered their cost of doing business. To me, it’s a win-win.”

That appears to be the NBC game plan. While CBS president Leslie Moonves and his boss, Viacom chairman Sumner Redstone, are probably right in saying that such CBS procedural dramas as “CSI: Crime Scene Investigation” and “Law & Order: SVU” will win the slot at 10 p.m., that isn’t a problem as long as Leno can come in second or third. It goes along with NBC Universal’s overall plan to program for high profit margins but not necessarily high ratings.

“Now Leno just has to perform at about a 2 rating among 18- to 49-year-olds and it’s a score,” Speciale says. “And I don’t think anybody is expecting much more or thinks it’s going to be another ‘American Idol.’ (Leno) just has to attract a consistent audience.”

If he can do that, Leno will earn a salary that could reach $30 million, depending on the ratings. He has a four-year contract, but NBC has an option to cancel after only two years, sources say. (He’s been making about $20 million a year hosting “The Tonight Show.”)

His viewership, however, does need to provide a strong audience lead-in for the news at 11 p.m. on affiliated stations. Sources say the affiliates have been nervous about the change and whether Leno can deliver as many eyeballs as the big dramas traditionally have done.

NBC’s dramas this season have typically pulled about a 2 rating, with ad spots selling for $70,000-$124,000, according to sources who say that generates $1.5 million-$2.6 million per hour. Leno on “Tonight” regularly rates about 1.5 (the highest in late night) and spots are sold for about $51,000 each. One big difference going into the new show is the way those spots are sold.

Currently, “Tonight Show” advertisers buy based on weekly average ratings. However, for “The Jay Leno Show,” in a key signal to the ad agencies that the new show deserves primetime ad rates, NBC has made a change.

“NBC had to make a decision on how to sell it,” Speciale says. “Late night was sold on a Monday-through-Friday average. They’re not selling (the new show) that way, which was an important distinction. Now you can buy Leno night by night.”

Speciale and Sternberg agree Leno also wins points from advertisers by offering to do live commercials, which the clients like because it’s a way to embed their message inside the show more effectively.

Leno’s new show, according to NBC publicity, is a comedy hour that will feature “the biggest stars, the most influential newsmakers and more laughter than ever before.” It will also feature topical humor which the network says makes it DVR-proof.

“If it works, it’s going to fundamentally change primetime television,” says Larry Gerbrandt, principal in Media Valuation Partners, which provides financial analysis to value media and entertainment properties. “If it doesn’t work, they will be faced with replacing not one failed show but five, after having cut back on their program development.”

Speciale predicts that, if it’s successful, “all the other networks are going to follow suit. Everybody pooh-poohed the news magazines when they first came along, and as soon as one took off, every network did the genre. I’d put (Leno) in the same historical trend.”

Since its debut 55 years ago, “The Tonight Show” has been a trailblazer in many ways. Back in the 1950s, when some stations signed off after the 11 p.m. news, NBC’s Pat Weaver put Steve Allen behind the desk, becoming the first to strike gold in late night. Allen lasted until 1957, when he was replaced by Jack Paar. Then in 1962, Johnny Carson began his three decades as the king of late night, a huge profit center for NBC and one of the major influences in the history of comedy.

Stand-up comics all wanted to do Carson’s “Tonight Show” because a successful appearance was “tantamount to being made (as a comic),” says Bob Thompson, Syracuse University professor of television and popular culture. “That has become less the case as we got more into the fragmentation of the audience.”

Despite this, he notes, “When Barack Obama chose to be the first sitting president on a late-night show, who did he go to but Leno?”

Now the question is how much of the Leno late-night audience will follow him to 10 p.m., and whether or not he can attract new, younger viewers who have typically shunned his show, often preferring such “hip” comics as Comedy Central’s Jon Stewart, ABC’s Jimmy Kimmel and O’Brien, who takes over in June.

There’s also no assurance Leno’s audience will watch O’Brien. “A lot of Leno’s audience is going to be shocked and won’t know what to do with Conan,” Thompson predicts. “The question is whether Conan will continue to do what he does so well — the Conan of the masturbating bear, wonder dog and all that — or will he do what Letterman did (when he moved to 11:30 p.m.), which is to tone down his act for the room. The question would be, ‘Is Conan as good when he’s not being this sort of Salvador Dali-esque character as he has done so brilliantly in his late-night spot?’ “

To succeed at 10 p.m., Leno almost certainly needs to lower the median age of his typical viewers, which for “The Tonight Show” has been about 54. NBC dramas currently attract a median age of 47, according to Sternberg.

“It’s going to depend on how they promote it and what they do that’s different,” says consultant Joyce A. Schwartz, president of JCOM, a futurist and consultant on marketing and new product launches for new and emerging media. “They’ve really got to book outrageous stuff. I’d like to see him do more on-the-street (material), travel around, rather than do it in the studio. That’s what he does best. He mixes with people and you don’t have anybody else doing that.”

(Editing by Dean Goodman)

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