Buzz builds for late-night talk shows as their ad revenue rises UP ALL NIGHT

By Stephen Battaglio

Los Angeles Times

NEW YORK

The television landscape has completely transformed since Johnny Carson gave his final farewell on NBC’s “The Tonight Show” in 1992. But even in the age of streaming video and DVRs, late-night TV is getting more attention than it has seen in years.

Viewers are eagerly awaiting next month’s debut of Stephen Colbert on CBS’ “The Late Show” and Trevor Noah taking the helm of “The Daily Show.” The transitions are expected to be major pop culture moments that are already generating excitement on Madison Avenue.

Late-night talk shows are seeing double-digit percentage gains in advertising revenue in what has otherwise been a stagnant TV ad market in recent years. And a new generation of hosts are using the Internet to reel in younger viewers.

“Late night is where the action is right now,” said Billie Gold, vice president and director of programming research for ad agency Dentsu. “There are very few new shows in prime time that are creating buzz among advertisers. Late night is being reinvigorated.”

As Colbert and Noah come on, NBC is doubling down on host Jimmy Fallon by signing him to a contract extension that keeps him on “Tonight” through 2021.

Fallon, who took over for longtime host Jay Leno in February 2014, is not only the late-night leader but is scoring better ratings than his predecessor. He has averaged 1.4 million viewers this season in the 18-to-49 age group that advertisers prefer. According to NBC Entertainment Chairman Robert Greenblatt, the “Tonight” franchise is “exceedingly profitable” again after having become a break-even operation for the network not so long ago.

The reward for a smooth host handoff can be handsome. The total 2014 ad spending on the broadcast network late-night talk shows alone was $597.5 million, according to Kantar Media. That’s 14 percent over 2013’s total, and Fallon’s show accounted for a significant portion of that increase.

It’s not that late-night TV is immune to the increase in viewer choices and technological trends that have sliced and diced the mass audience that Leno and David Letterman battled over in the 1990s. Ratings for all of the late programs have declined in the current TV season. But more people are watching than ever before as digital video clips from the shows draw hundreds of millions of online views.

The potential for turning those online views into ad dollars is one reason CBS executives are enthused about Colbert’s arrival Sept. 8.

Big-name guests honored David Letterman during the final months of his 33-year run as a late-night host. But as a business, “The Late Show With David Letterman” had faded. While Letterman took a pay cut in his final seasons, the profitability of his show had diminished. Until Colbert debuts, CBS is running drama repeats in “The Late Show” time period. They’ve been drawing the network’s best late night ratings since the 2010-11 TV season.

With Colbert on board, the network has already seen “healthy increases” in ad rates and volume of commercials sold during the upfront sales market for the 2015-16 TV season, CBS Chairman and CEO Leslie Moonves recently told Wall Street analysts.

After years of paying a license fee to Letterman’s company to produce “The Late Show,” CBS now owns the franchise and will produce it in-house. That gives CBS more control over costs and allows it to reap the revenue the program generates on digital video platforms as well as sales of the show to overseas broadcasters.

CBS has already gotten a sense of late night’s digital potential with its new “Late, Late Show” host, James Corden. The British actor was a virtual unknown in the U.S. when he took over the 12:35 a.m. time slot from Craig Ferguson. But his segments, such as Carpool Karaoke, in which he sings with star performers inside a moving SUV, have exploded online. Corden’s musical ride-along with pop superstar Justin Bieber has drawn more than 32 million views on YouTube since it went up May 20.

Other late-night producers and network executives note that online video revenue is still modest compared with what they take in for TV commercials - and converting those views into dollars is one of the goals for their business. Big money won’t be made, they say, until they can find a way to drive more users to the networks’ own websites for clips instead of depending on YouTube, which takes a large share of the ad revenue generated.

One major change in the late-night wars is the lack of backstage rancor that characterized the Leno-Letterman rivalry.

“I think there were some weird personality issues among various late-night hosts over the years,” Greenblatt said. “Now that’s in the past. Colbert and Jimmy Fallon are really good friends. They are going to be friendly competitors. It’s a good business when you have hits.”