NBC’s Dilemma or 2003 Re-visited

11 December 2009

About six years ago NBC was sitting pretty. They still had Frasier, The West Wing, Friends, Will & Grace, ER, three Law & Order shows and two Dateline shows. They also had a new show called The Apprentice; it was huge. NBC was sitting pretty in primetime and late night could not have been better. Jay Leno was enjoying his eighth straight year as late night king and Conan O’Brien was setting ratings records for his time slot. Then the dominoes started to teeter a little. O’Brien’s contract was up and NBC was forced to make a decision that would change their future though how they did not quite know.

Twelve years earlier, they faced the same decision. NBC learned from that debacle and would not make the same mistake twice. They signed O’Brien to a long-term contract and promised him the Tonight Show, the crown jewel in all of late night television. They told Leno that he would leave in five years time. Leno signed off on it and accepted graciously.

David Letterman licked his chops and waited out the five years at CBS knowing full well that NBC never holds up their end of a contract. He also was rooting for O’Brien since Dave vs. Conan head to head would be a win for his CBS show.

As the Leno retirement date approached, Jay decided he wasn’t ready to leave quietly and started entertaining offers from ABC and FOX. This panicked NBC. Could they afford to lose Jay and thus have him go against Conan? Should they dump Conan and have him defect to ABC? Then there was a little thing Conan had written into his contract. If he was not the host of the Tonight Show on May 29, 2009, NBC owed him $45 million. The joke was on Conan, NBC didn’t have $45 million.

On December 28, 2008, NBC signed Leno to a four-year $20-30 million contract that would give him a show to be developed airing in prime time. Conan would get the Tonight Show and Jimmy Fallon was safe as the newly installed host of Late Night.

Here we are about three months in to Leno’s new show and Conan on the Tonight Show. NBC’s gambles have been a disaster.

What will be the next step is Comcast decision as they recently bought a 51% stake in NBC from GE.

Leno’s show is inexpensive to produce compared to the dramas it replaced. That is the selling point and redeeming quality of the show. It can survive low ratings due to the low production costs.

From the outset, NBC stated that if The Jay Leno Show gets a national 1.5 rating they can make $300-million gross profit. Currently, Leno is right at the 1.5 mark but has dipped below 1.3 overall last week.

The main difference between late night and prime time is appointment television. The Jay Leno Show is not appointment TV. Grey’s Anatomy is. People watching Jay are watching because there is nothing better on another network. As a result, Jay is not getting A-List guests. Next week Jay has: James Cameron, Christina Applegate, Nick Lachey, Sigourney Weaver, John Mayer, Sam Worthington, Mary J. Blige, Glenn Beck and Kate Gosselin. Three of the guests are plugging the next giant blockbuster, “Avatar.”

Not all of it is Leno’s fault. NBC has one show in the top 20, Sunday Night Football. His lead-ins suck. How can he get decent numbers when NBC can’t put any weekday show into the top 20? As a result of these horrible lead-ins, Leno can’t raise his ratings, local NBC News is dying and Conan’s ratings are dead.

I think I am more qualified to speak on this than most media experts do for two reasons. As you can see below, I have known Jay Leno since 1982. In addition, I interned at NBC Chicago in 1987, I know intimately how they work.

Here is what they are faced with:

If NBC decides they have had enough of Jay and his low ratings they can cancel the show however, they do not have any other shows in the hopper to take Leno’s place. They can instantly move the current 9:00 pm dramas 10:00 pm. That still leaves a hole on Thursday nights, once the sole property of NBC. They would have to add Dateline NBC to fill in a few gaps or move a few of the USA shows to NBC (USA and NBC are part of Universal/Vivendi, parent company of NBC.) Then they could ramp up production to get something new on the air when the Olympics end in late-February.

Jay has a buyout in case his show is cancelled and he is not put back into the Tonight Show slot. (More on that later). If he is not put back at 11:30, ABC will be glad to welcome him with open arms. They have even lifted the ban on ABC stars appearing on his show.

Jay is 59-years-old, putting him back in the Tonight Show would be a short-term solution. He cannot be the hip guy at that time in his mid-60’s. In addition, his demo is old enough already, the late night audience is young and Leno is not.

If Leno goes back to the Tonight Show, what happens to Conan? He gets paid yo! He has a $25-million buyout. As has already been demonstrated, NBC does not buyout contracts. I do not think NBC would pay Conan to leave, he is 46-years-old and will go to ABC, where he can be on the air for 20-years.

When Leno does call it quits who would take over the Tonight Show? Conan will be gone. Jimmy Fallon? He is not ready nor will he be. NBC has few options for the future of late night.

The key year is 2012. The Mayans said it would be the end of the world and for NBC it might be. That year will be a seismic shift in late night. Letterman’s current CBS deal expires in 2012, he will be 65-years-old and will have been on late night for 30 years, the same number as his idol Johnny Carson. Who else has a deal expiring in 2012? Comedy Central’s Jon Stewart. The cable network is owned by Viacom, the same owners of CBS. In 2012, Stewart will be 49; he may be too old for the Daily Show. He may even be too old to host the Late Show. If he does get that prime gig, he will host it for 10-15 years. Plenty of time for the next hot young comic to be discovered.

Unless CBS signs Conan, if he is dumped in favor of Jay. If that were the case, Conan would be in a holding pattern or two years. His exposure on CBS would be limited to hosting specials in prime time.

My take is that NBC will pay Leno to leave, probably the same $25-million as Conan, the difference is Leno has fewer options. There is no place for him at NBC but hey, thanks for your 20+ years of service.

As for NBC, it is back where they started in 2003.

For those of you lighting up this weekend, Happy Hanukkah.


2 Responses to “NBC’s Dilemma or 2003 Re-visited”

  1. Susan Kathleen Says:

    I’ll be lighting up this weekend in honor of Jay…

  2. Bud Says:

    That is the best pic of you I can imagine.

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