The War on Jay Leno
In fact, data shows NBC and its broadcast rivals are chasing a late-night audience that is more interested in watching DVR-recorded shows or web clips, not to mention Jon Stewart, Stephen Colbert or other late-night upstarts such as Russell Brand on FX or Chelsea Handler on E!. With ratings headed south, many believe it soon might make sense for NBC to consider one of three alternatives: eliminating the 12:35 show and extending Tonight to 90 minutes, running a repeat of Tonight at 12:35 or giving the hour back to affiliates. More likely, when Fallon exits the Late Night slot, it will be filled by another lower-cost comic, possibly Lorne Michaels protege Seth Meyers.
Fallon, whose CAA agents (led by Richard Lovett) are negotiating a new deal with NBC -- with increased leverage care of the media attention -- is likely to come cheaper than Leno, who, sources say, still is making $15 million a year even after he took a roughly 40 percent pay cut last year. Leno, fiercely loyal to his staff, agreed to the reduction to avoid having to lay off more than the 20 or so employees necessary to bring the show's budget down from around $100 million per year. Tonight also carries an expensive lease at its Burbank studio, which NBC sold to the Worthe Real Estate Group in 2008.
Perhaps ironically, Leno now is averaging smaller ratings than when O'Brien was forced off Tonight with a 1.1 rating among viewers ages 18-to-49. Meanwhile, Stewart is beating Leno (albeit a half-hour earlier) with a 1.1 rating on Comedy Central. And The Daily Show and The Colbert Report dominate the field among viewers 18-to-34, as well as among young men, an elusive demo. At the same time, for the first 10 weeks of the year, Kimmel closed the gap to within 81,000 demo viewers of Tonight and already is out-delivering Letterman among that set.
In addition, Fallon's snark-free demeanor and silly stunts (beer pong with Betty White, "mom dancing" with Michelle Obama) have turned him into the late-night host with the highest Q score, the likability measurement to which network executives pay close attention. With an appeal score of 15, according to Henry Schafer, executive vp of The Q Scores Co., Fallon has surpassed Leno's 2013 Q score of 13. That's a year-over-year drop of five points for Leno, long the most-liked late-night host, and a jump of two points for Fallon compared to 2012. In addition, Fallon, like Kimmel, has a knack for viral videos -- already the next wave in late night, where even if digital CPMs are now pennies on the TV dollar, there is still a flag in the ground that Leno and Letterman have yet to plant.
NBC is building Fallon a new stage at 30 Rockefeller Plaza in New York and is planning to relocate The Tonight Show there -- though sources say the exact timing is not decided because Leno's deal requires NBC to pay a huge penalty if he is taken off the air before his contract expires in September 2014. "Walls are being torn out and offices are being moved," says a person familiar with the plan. The current Late Night studio will be expanded from its 180-audience-member capacity to hold at least 350 and connect three floors at 30 Rock, insiders say.
The bigger facility would not only accommodate Fallon's Tonight but also film premieres and employee meetings. And because it holds more than 200 people, it would qualify for tax breaks that New York lawmakers are considering. While California politicos have remained mostly silent on the issue of Tonight and its 200 jobs leaving the state (save for the mayor of Burbank, who vowed a hunger strike to keep the show), New Yorkers have welcomed the prospect. Still, some have balked at the use of tax incentives. "Jimmy Fallon does his show here already," Republican Assemblyman Ray Walter told WGRZ in New York. "It seems like a waste of money -- just a gift to these production companies."
In Burbank, where Tonight has taped since Johnny Carson moved the show there in 1972, employees tell THR they hope Leno will take another TV job. Although his options likely won't be as appealing as they once would have been, he will have choices. The most obvious next move would be a late-night show on Fox. In fact, according to Bill Carroll, director of programming at Katz Media Group, it's the "only logical place" in syndication. What's more, Fox affiliate board chairman Steve Pruett recently told The New York Post that if the network were to present "the right business plan, the affiliate board would be interested." Still, Fox weighed the option of luring O'Brien when he lost Tonight and ultimately decided it did not make economic sense. Carroll estimates it would cost $100 million to launch a new Leno show.
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