The Biz: ABC becomes Letterman sweater

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ABC luring David Letterman is no stupid pet trick: If it lands the late-night star, the network stands to gain a smart $70 million a year in advertising revenue.

The news that ABC would like to replace its intelligentsia-magnet Ted Koppel's "Nightline" with wisenheimer Letterman is, economically, not that hard to grasp. ABC's longtime "Nightline" simply doesn't attract the young viewers, adults 18-49, which are key targets for national advertisers and a major source of revenue.

ABC would gain access to late-night, young-skewing, movie and soft-drink marketers, staples of "Late Show with David Letterman" as well as "The Tonight Show with Jay Leno." "Nightline" typically pulls in adult viewers ages 25-54, and its advertisers, many pharmaceutical companies, target its older audience.

A high-profile late-night show could improve ABC's bottom line. According to Nielsen Monitor-Plus, "Letterman" pulled in $175.3 million in advertising sales for all of 2001, while "Nightline" grabbed about $73 million. "Politically Incorrect" garnered $35.6 million. Together ABC's two half-hour shows are about $70 million behind "Letterman" in advertising sales. Late night leader, "Leno," took in $239 million.

While "Letterman" would do a lot to lift the morale at the entertainment division of ABC, a major problem, according to executives, would be how to promote "Letterman." With no high-rated, prime-time shows in which to run "Letterman" spots, his ratings might not grow.

The good news is ABC-owned stations are still No. 1 in virtually all of their markets, especially for their late evening newscast. This could provide "Letterman" with an even better lead-in than CBS stations provide.

`flesh wounds'

"ABC does great in the major markets, though they are not what they were," says Mel Berning, exec VP-director of national broadcast for Bcom3 Group's MediaVest Worldwide, New York. "They had an overall 15%-17% hit, and have taken some flesh wounds."

Initially, media executives warn "Letterman" could lose some steam if it moves to ABC, simply because CBS' prime-time numbers are substantially higher than ABC in regular prime-time programming. But "Letterman" may not lose much in the areas that count the most-young viewers.

"ABC and CBS on young demographics are lot closer skew thanyou might think," says Roy Rothstein, senior VP-national broadcast research for Zenith Media Services. For prime-time programming, ABC recently pulled a 2.7 rating in 18-34 vs. CBS's 3.2.

Through Feb. 29, "Letterman" earned a Nielsen Media Research 1.8 for adults 18-49 and a 1.5 for adults 18-34 (another popular demo for late night advertisers). These numbers are higher than "Nightline," with a 1.6 in adults 18-49 and 1.0 in adults 18-34. "The Tonight Show" still leads in these categories-a 2.3 in adults 18-49 and a 1.9 in adults 18-34.

Now that executives at ABC have started negotiations with Letterman, they are in a delicate position. "ABC has put themselves in a bind-it's going to be tough to dig out of this," said one veteran ad-agency executive. "If they don't land Letterman, they are going to piss off the news crew. Would Ted Koppel still want to come back and do the show?"

ABC's other late night show, "Politically Incorrect" with Bill Maher, has slipped in the ratings-and seems destined to be cancelled anyway, according to executives. A move by Letterman would seal the show's fate.

What would CBS do? It still has "The Late Late Show with Craig Kilborn," but analysts doubt whether Kilborn is ready to take over Letterman's spot. If Letterman did make the move, and Kilborn took over, it would create an interesting time-period battle, since Letterman's production company, Worldwide Pants, also produces "The Late Late Show."

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