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‘Tonight’ Switch Exposes Broadcasters’ Losses to New Media

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April 4 (Bloomberg) -- NBC’s decision to hand off stewardship of “The Tonight Show,” the most popular late-night program, highlights the dilemma facing all of the major networks: shrinking audiences for broadcast TV.

“The Tonight Show With Jay Leno” is averaging 3.5 million viewers a night this season, down 25 percent from five years ago, Nielsen data show. The program attracts about 1 million of the 18-to-49-year-olds that advertisers target, fewer than Conan O’Brien when NBC fired him as host in 2010.

NBC, owned by cable operator Comcast Corp., said yesterday “Late Night” host Jimmy Fallon, 38, will succeed Leno next year. The change helps the network attract the younger viewers marketers want, said Peter Gardiner, who advises on ad strategies. While “The Tonight Show” is the leader, NBC sees a day when online viewing matters as much as live TV, he and other ad executives said.

“Late night will never be the same as it was 10 years ago,” said Jon Swallen, chief research officer for Kantar Media in New York. “The same goes for the rest of television.”

Success on the Internet has become a prerequisite for TV. On-demand viewing, digital recorders and next-day Web clips have diluted the attraction of late-night shows and forced networks to consider new priorities when replacing a host, said Greg Evans, a TV critic for Bloomberg Muse.

Cable Competition

Late-night options, including O’Brien on Time Warner Inc.’s TBS, Chelsea Handler on Comcast’s E!, and Jon Stewart and Stephen Colbert on Viacom Inc.’s Comedy Central, have shrunk broadcast audiences and their ad dollars. Shares of Philadelphia-based Comcast rose 0.7 percent to $42.12 at the close in New York. They have gained 13 percent this year.

Advertising sales on “The Tonight Show” have declined 43 percent to $146 million from $256 million five years ago, according to Kantar Media, a research unit of WPP Plc, the world’s largest advertising company.

“This is a new world for TV talk-show people,” said Gardiner, principal of Gardiner & Associates and the former chief media officer of Deutsch Inc. “The digital video platform has become a bigger part of the business.”

Fallon has fans on TV and on Google Inc.’s YouTube, making him a safer choice for advertisers than when Leno took over in 1992, according to Jim Boyle, managing director at SQAD, an industry forecaster that tracks $35 billion in advertising sales. NBC will move “The Tonight Show” to New York from Los Angeles as part of the handover.

‘Unique Talent’

“We are purposefully making this change when Jay is No. 1, just as Jay replaced Johnny Carson when he was No. 1,” NBC Universal’s chief executive officer, Steve Burke, said yesterday in a statement. “Jimmy Fallon is a unique talent and this is his time.”

“The Tonight Show” heir is the top-rated late-night host in his time slot at 12:35 a.m., according to Nielsen data from NBC. He also has 250,000 YouTube subscribers, Michelle Slavich, a YouTube spokeswoman, said in an e-mail. Fallon’s online musical clips, including the “History of Rap” duets with Justin Timberlake, have been viewed millions of times.

“Fallon has the magic,” Gardiner said in an interview. “He’s funny, he’s viral, he’s everything you’d want a host to be these days.”

That will help NBC with younger viewers. Under Fallon, “The Tonight Show” may lower the average age of its audience by two or three years to about 50, Swallen said.

YouTube Fans

Leno, 62, host for almost 22 years, has 20,000 YouTube subscribers, less than 1/10 of Fallon’s, with clips that focus “largely on his TV interviews,” according to Slavich.

Last night, Leno joked about his long-time rivalry with David Letterman, CBS Corp.’s late-night host, who once vied for “The Tonight Show” job.

“I had a really awkward day today,” Leno said in his monologue, according to a transcript from the network. “I had to call David Letterman and tell him he didn’t get ‘The Tonight Show’ again. Awful. Terrible.”

On the Web, both Fallon and Leno trail ABC’s Jimmy Kimmel, who has 1.5 million YouTube subscribers. Kimmel has also increased his TV audience since moving to 11:35 p.m. from a later time slot, Nielsen data show.

Fallon’s brand of humor is mainstream and could help NBC stay No. 1 after the transition, Bloomberg’s Evans said.

“NBC clearly wants a younger audience, but Conan was too edgy,” Evans said. “Fallon is more with keeping in ‘The Tonight Show’ tradition of a middle-of-the-road comic.”

Ratings Decline

The changes in late night, including Kimmel’s move at Walt Disney Co.’s ABC in January, come as the major broadcasters collectively experience audience losses approaching their worst of the past decade, according to Nielsen data. In late night, Letterman is down 5.4 percent this year.

In prime time, the four major broadcast networks have lost 7 percent of their combined viewers this season and almost 11 percent in the 18-to-49 group, according to Nielsen data.

“Leno and Letterman have become a little irrelevant,” Gardiner said. “The networks need to do something to shake up late night.”

To contact the reporters on this story: Alex Sherman in New York at; Andy Fixmer in Los Angeles at

To contact the editors responsible for this story: Anthony Palazzo at; Nick Turner at

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