He changed, and so did media.

Photographer: John Paul Filo/CBS via Getty Images

How Media Is Consumed After Letterman

Barry Ritholtz is a Bloomberg View columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He blogs at the Big Picture and is the author of “Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy.”
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The past month has seen an outpouring of tributes and praise for the just-retired "Late Show" host David Letterman. I have been linking to some of the more informative (and amusing) discussions in the morning reads (see this and this). None have really captured the context I was looking for: what does this tell us about the future of media consumption in the changing technology, media and social landscape?

The arc of Letterman’s career has run parallel to those changes. Many of the companies that were central to the changes either were, are or will be in your investment portfolio. Isn’t competition grand?

I didn't watch much TV as a kid (parental restrictions), but as soon as I was on my own, I went wild. I got one of those new fangled VCRs once I could afford one, and the first show I began taping regularly was "Late Night With David Letterman." I never found Johnny Carson, whose show aired before Letterman's, especially funny; he was too bland. Letterman had edge, he was unpredictable. 

At the time, most of us had no idea what drove Letterman’s antics. The 12:30 a.m. time slot was owned by Carson's production company, and he wanted as little overlap between the "Tonight Show" and "Late Night" as possible. The strictures included no sidekick like Ed McMahon, no big band like Doc Severinsen's. Only four jokes were allowed in the monologue. Carson’s old school guests and routines were also off limits -- as if anyone under 60 wanted to book Zsa Zsa Gabor or steal a tired shtick like “Carnac the Magnificent.”

Letterman and crew were forced to innovate. Thus, we were given Stupid Pet Tricks, Top 10 lists and all of the inventive remote segments -- Letterman working the drive-through window at a Taco Bell, Letterman driving a rented convertible through a car wash with the top down and so on. For someone discovering television beyond "MASH" reruns, it was glorious. The show became a cult favorite, especially with the college and stoner crowd.

Once Letterman moved from NBC to CBS and the 11:30 p.m. time slot, the show changed. The manic inventiveness disappeared once he no longer had to follow Carson’s ground rules. Appealing to a broader cross section of America, the show became warmer and less ironic. The edge softened. Much of the old fan base graduated, got jobs and drifted away from the show.

The full evolution of the program -- including its rise and fall -- can be seen in how its graceful farewell was consumed. Although the ratings were up for the last month after a long-term decline, and the final show was seen by almost 13.8 million viewers, that isn't how most people watched the "Late Show" in recent years. Nor is it how many people see the show's competitors, such as Jimmy Fallon or Jimmy Kimmel. 

Consider the number of people viewing clips on Google’s YouTube: On the "Late Show" YouTube channel, 1.29 million watched Bill Murray Pops Out of a Cake; 1.62 million watched the final Top 10 by an all-star celebrity lineup doing Things I've Always Wanted to Say to David Letterman; and Adam Sandler’s lovely musical tribute to Letterman was seen 1.18 million times. And that's just a sampling. Think back to the last clip of a program you watched -- how did you find it? If you are like me, the odds are it was through Facebook or Twitter.

“Cutting the cord” is a popular expression, but that isn't very accurate. What really occurs is swapping one cord for another. You can give up your cable or satellite, but to watch television you need a different, high bandwidth line. Whether that is provided by a cable company such as Time Warner Cable, Comcast or Cablevision, or a fiber-optic provider such as Verizon or AT&T, something is bringing the content to your home. High-definition television still consumes too much bandwidth to be cheap and reliable enough to wirelessly watch on your tablet or phone (downloaded shows and WiFi are a different story).  

Appointment television -- watching shows as they are broadcast -- has become a thing of the past. Tivo and DVRs have made timeslots all but irrelevant. HBO is one of the leaders in moving away from the separate content/pipe arrangement. HBO Go allows direct subscription access to the company’s full library of past and present shows. You can also buy shows such as Carson's "Tonight Show" on Apple iTunes (but not Letterman's "Late Show").

The way we view television dramatically changed during the course of Letterman's career. He began as the VCR was becoming a staple in America’s living rooms; he switched from NBC to CBS a few years before the DVR was introduced (and at least a decade or more before it became ubiquitous). And he retired just as the content providers began giving viewers access independent of cable or satellite services.

How the public will consume media in the future is unclear. What is possible, or even likely, is that the technology framework for how that media is consumed is in the broad indexes that might be in your portfolio today. Or they will be soon enough. 

  1. "Late Night" is also on CBS.com, but not Hulu, a company controlled by NBCUniversal (owned by Comcast), Twenty-First Century Fox and ABC Television Group (owned by Disney). 

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Barry L Ritholtz at britholtz3@bloomberg.net

To contact the editor on this story:
James Greiff at jgreiff@bloomberg.net