Yahoo Finance Netflix chief content officer: How we justify paying David Letterman $2 million per episode
Among Netflix (NFLX)’s upcoming projects is a David Letterman show in which he returns for his version of a Barbara Walters special, as Netflix Chief Content Officer Ted Sarandos put it at Vanity Fair’s New Establishment Summit. For each episode, the “retired” late-night host is slated to receive a whopping $2 million.
That may seem like a ton of money, but for the streaming service it makes sense.
“Some people will join Netflix to watch that,” Sarandos told Andrew Ross Sorkin. “There’s some people who will not quit because the show’s coming on next month.”
Exclusive content has long been Netflix’s secret ingredient in keeping a hold on its subscribers, many of whom came much earlier for movies and box-set dumps of classic shows like “Friends.” But since its breakout hit “House of Cards,” Netflix has been known for its clever original content strategy, led by Sarandos.
Sarandos said that using exclusive content as a lure applies to large shows as well as smaller shows. Getting a Letterman show would certainly funnel anyone looking for further doses of the 70-year-old comedian to Netflix. The question, though, is how much. With all the data from streaming as well with other demographic data, Sarandos was armed with tools to help him come to a decision.
“We have a bunch of audience data on whether [Letterman viewers] would be Netflix subscribers and all that stuff,” said Sarandos. “But at the end of the day, what it says is that we can afford to pay Dave a number that will make sense for him to come back. The show will be loud and they’ll want to see more of it.“
Ethan Wolff-Mann is a writer at Yahoo Finance. Follow him on Twitter @ewolffmann. Confidential tip line: emann[at]oath[.com].
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