Leno move makes sense, and saves cents

For many Americans, the current recession means eating out less often, renting DVDs rather than going to the multiplex, buying generic rather than brand names, and carpooling.

For NBC, it means moving Jay Leno to 10 p.m.

(Msnbc.com is a joint venture of Microsoft and NBC.)

Saving money directly wasn’t the sole reason the Peacock took their 11:35 p.m. ratings rock and moved him to 10 p.m., and this probably would have happened anyway, even if the economy wasn’t as bad as it is.

There was the little matter of keeping Conan O’Brien — and his 18-to-49 demographic — happy, which meant moving him from the 12:35 a.m. graveyard shift ahead to the prestigious “Tonight” show assignment once occupied by talk show royalty that includes Steve Allen, Jack Paar, Johnny Carson and, of course, Jay. There were considerations involving entertainment politics, including keeping Leno away from ABC.

But Leno’s move to 10 p.m. puts the focus on a larger issue, namely the effort by networks to adjust to changing viewing habits and therefore a changing economic landscape.

“NBC and (president and CEO) Jeff Zucker and (NBC Entertainment co-chairman) Ben Silverman have been up front for some time about the fact that the business model has to change,” said Ray Richmond, veteran TV critic for the Hollywood Reporter. “It’s an admission that they’re giving up on 10 o’clock, because it’s too much to have to pay for dramas. As much as they’ll have to pay Jay, it’s still cheaper than mounting produced dramas.”

$30 million a year? A bargain!
Leno has agreed to a new contract with NBC Universal that calls for a reported $25 million to $30 million per year. But even at that price, having Leno host a one-hour variety show five nights a week at the 10 p.m. slot is expected to cost the network only around $2 million per week. Five hours of scripted dramas Monday through Friday at that hour costs somewhere between $15 million and $20 million per week.

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“In the long run, NBC saves millions and millions of dollars not to produce those 10 o’clock shows,” noted Stuart Levine, who covers television for Variety and often contributes to msnbc.com. “And the ratings could be better. They’re anticipating good ratings for Jay, and the ratings right now for those 10 o’clock shows are hit or miss.

“The downside is that they have five less hours of prime time fare. The days of those great 10 o’clock NBC shows are over. No ‘ER.’ No ‘Hill Street Blues.’ No ‘St. Elsewhere.’ Financially, it makes sense. But in a broader perspective, they’re not going to be this great network anymore. There’s less opportunity now to make great shows.”

It’s debatable whether the Leno move to 10 p.m. will have any long-range negative impact on the NBC brand, whether any loss of prestige from fewer lauded one-hour dramas will translate into less revenue. It could happen. Fox has thrived even though it turns over the 10 p.m. hour to its affiliates for local news.

But there are many variables in this equation. One important one, Levine pointed out, is DVD sales.

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“Those (one-hour dramas at 10 p.m.) shows do very well,” he said. “You can’t put Leno on DVD and sell it. Those ‘CSI’ shows do a lot better on DVD around the world than they do in the U.S.”

Yet ratings for one-hour dramas at 10 p.m. have been in steady decline, which suggests that new ideas are not only welcome, but needed.

One veteran researcher who has worked in and around television for decades but wouldn't speak on the record so as not to alienate current clients said the use of television has risen consistently over the past 10 to 15 years. But he said that use includes DVDs, video games, DVR usage and others. The researcher believes that viewers are always looking for new ways to enjoy television.

“If you can’t serve them as a scheduled entity, (viewers will) take things into their own hands,” he said. “And they’re just as happy.”

With this dynamic in mind, he said the Leno move to 10 p.m. could provide a viewer boost to NBC. “There is a growing need for programming that offers a variety of types of entertainment that falls within a venue,” he explained, “a place where people don’t know what they’ll get from day to day, but they know when it’s finished they’ll be happy.

“I think it’s an opportunity for NBC. Less money spent, and an opportunity to attract new viewers, to increase unduplicated reach (the total number of people who come in to sample the wares) and to increase the frequency of viewership over those five nights. They might watch and then turn it off. But they’ll come back tomorrow night to see what Leno has.”

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