Late-night vulnerability

LOS ANGELES — An apologetic David Letterman trotted out before the cameras with a quip that raised questions and fetched laughs: "There's a possibility," he said, "that I'll be the first talk-show host impeached."

Whether or not Letterman will lose his job—a very unlikely scenario at this stage—over sexual relationships with staff members, the scandal, as well as Conan O'Brien's recent show-canceling injury, are a reminder of how much the networks have riding on fragile, fallible individuals in their late-night programming. Five weekly hours of valuable real estate and tens of millions of dollars in advertising revenue are resting on their health, humor and behavior.

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Thanks to loyal audiences and relatively cheap per episode price tags, hosts like Letterman have become profit centers for their ailing networks. According to TNS Media Intelligence, his Late Show brought in US$188 million in ad revenue last season, while Jay Leno's Tonight Show delivered $132 million over the course of the season. (The Tonight Show fetched more viewers and a more expensive 30-second spot, but Letterman's show carried more commercial time.) Though less watched, Late Night—first with Conan O'Brien, now with Jimmy Fallon—managed to register US$40 million worth of advertising for the September to May period.

The hosts' value is similarly evidenced by their lengthy contracts and seven- to eight-figure salaries. Letterman, who actually owns his show, is the genre's top earner: He pulls down an estimated US$32 million a year from his work on The Late Show. To protect against poaching or fleeing and perhaps to incentivize responsible behavior, Leno, too, was locked into a long-term contract at The Tonight Show that paid him approximately $27 million a year, while O'Brien pulled down $14 million in the time slot after him. (Both are believed to be earning more in their current gigs.)

In an era of salary slashing and other cost cuts, the network rationale is simple: Unlike a drama or comedy, which is typically story-driven and ensemble-based, the host of a late-night show is the draw. Even the changing lineup of nightly guests, which can attract or put off casual viewers, doesn't significantly impact regular viewership patterns. What's more, these hosts are not easily replaced. Consider the lengthy list of personalities like Pat Sajak, Chevy Chase and Joan Rivers who have tried and failed in the host's chair.

There's no reason to question the reliance on the hosts so long as they—and the viewers' appetite for them—remain healthy.

But consider O'Brien's on-set injury two weeks ago, which showed how little could be done without the comedian. After hitting his head while filming a Tonight Show segment, the host was forced to seek treatment. A repeat aired later that night. (Fortunately for O'Brien and NBC, the damage was minimal and he had a weekend to recover.)

What would General Electric (nyse: GE)-owned NBC do if something were to befall Leno, who has even more riding on him as the face of a new prime-time model? While he's been both remarkably healthy and scandal-free, NBC has spent an estimated US$10 million to promote his 10 p.m. talk show, which replaced five hours of costlier scripted fare. It remains a closely watched experiment subject to viewer taste—and according to comments by NBC brass, one without a backup plan.


What Do Leno, Letterman and Conan Earn?

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