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RELATED: Who Will Buy 'Arsenio'?
The return of The Arsenio Hall Show to late night represents a $50 million bet by CBS Television Distribution and Tribune, who are partnering on the program. But the much-hyped, celebrated arrival also begs a question: How much is the deck already stacked against Hall before the first play is made?
In fact, the odds are pretty long. The show—which premieres in syndication on Tribune, CBS, Local TV, Sinclair and other stations on Sept. 9, 2013—is going to have to hit its ratings out of the park to become a moneymaker. These days, even NBC’s storied Tonight Show is having a hard time making its financials work.
Arsenio’s re-entry is designed to get Tribune out of the late-night sitcom business, which is expensive, risky and doesn’t allow stations to control much of its advertising inventory. But it will also train a bright spotlight on late night itself, which—like myriad dayparts, perhaps most notably the evening news—struggles to prove it still has big-ratings and big-dollar potential in an increasingly fragmented viewing world.
Putting first-run instead of sitcoms in late night carries its attendant risks. In its first year, the cost of producing Arsenio is estimated to be $36 million, not including marketing, which will likely run $10 million to $15 million, according to sources. Compare that to an estimated $75 million annually—not including Jay Leno’s estimated $15 million salary (which has been reduced significantly in recent years)—for NBC to produce The Tonight Show.
TV stations are paying cash license fees for Arsenio—in the range of $180,000 per week or $9.4 million for the year, with much of that coming from Tribune. The barter split is a local TV-heavy nine minutes, with five minutes of time for CTD to sell to national advertisers in every hourlong program.
Should Arsenio manage a 1.0 household rating average—a reasonable expectation—CTD stands to earn $26 million a year in advertising revenues at a generously estimated $10 household cost-per-thousand (CPM) advertising rate, according to estimates, plus the $10 million in cash license fees. That would mean in year one, Arsenio Hall would run a deficit of at least $10 million to $15 million. That’s a common syndication scenario, but at those performance levels, the program will have to show serious growth potential in order to remain on the air.
“I think that Arsenio Hall is going to need time to grow like any show, but at the same time we are going to know pretty quickly if it’s got traction,” says Sean Compton, president of programming and entertainment for Tribune, who recruited Hall back to the air and offered him Tribune’s stations as a home. “Look at shows like [Debmar-Mercury’s] Wendy Williams. For three years everyone said, ‘Why is Fox renewing that?’ But now it’s up and it’s having a nice run. I think these shows need time, as long as the show is produced well, which it will be, and gets proper promotion, which it is getting.”
Late Night’s Economic Challenges
Like all of television, late night has become an increasingly tough business. Once established, its personalities tend to stay put, but an established late-night franchise is no longer the license to print money it once was.
While The Tonight Show remains late night’s highest- rated show, its revenues have plunged as audiences have fragmented. The Tonight Show once earned $150 million annually for NBC, according to reports; today, that number falls somewhere between $25 million and $40 million. The show’s upcoming move to New York is motivated by more than just Jimmy Fallon’s desire to stay put: Last spring, New York instituted a tax credit that will reimburse The Tonight Show for 30% of its costs, or as much as $25 million annually.
That means while Arsenio Hall is cost-conscious, the show probably can never be cost-conscious enough in today’s economically tight TV environment.
“It’s rough,” says Hall. “I went in this morning and said to all my writers, ‘I know that everyone in this room is here because for whatever reason you wanted to give me a shot.’ I don’t have the big baller network money. I thanked them for being here. I know they aren’t here because I backed up the Brinks truck and loaded up their Volvos with cash.”
For its part, CTD says it’s giving the show its all. “We have got every resource to launch a pretty big late-night show. We haven’t cut back in any way on this show and what it needs in order to make it successful,” says Maureen FitzPatrick, CTD’s executive VP of programming and development.
Hall is well aware of the state of late night. “Back then, it was a small world of Johnny the King,” he says. “Back then, I could do a show for the demographic that I liked. It’s not as easy anymore.”
Facing Jay, Dave and Jimmy
Indeed, late night has seen a seismic shift in the 19 years since Hall’s departure. In 41 of the top 100 markets, Arsenio Hall will air at 11 p.m. In 29 of the top 100 markets, the show will air at 10 p.m., and 17 of those markets are in Central and Mountain time zones where late night starts one hour earlier. The Tonight Show and Late Show with David Letterman both come on at 10:35 p.m. in those mid-country markets.
Thus, in the top-ten markets, Arsenio Hall will go head to head with the established late-night players, although not necessarily for the show’s entire hour. In New York and Los Angeles, the show will air at 11 p.m. on Tribune’s WPIX New York and KTLA Los Angeles. Arsenio Hall will start at 10 p.m. on Tribune’s WGN Chicago and KDAF Dallas. On Tribune’s WPHL Philadelphia, the show will start just five minutes ahead of Leno and Letterman at 11:30 p.m.
When Arsenio aired from 1988-94, many of its strongest affiliates were owned by CBS, including WBBM Chicago and WJW Cleveland. Fox affiliates also carried the show in many markets, but bumped it at the end of its run in favor of Fox’s short-lived The Chevy Chase Show. Making things even tougher, when Letterman moved over to CBS in 1993, the CBS affiliates that carried Arsenio switched it out for Letterman, pushing Arsenio out of many of its best time slots.
Today, the late-night landscape is far more crowded and its ratings more challenged. NBC remains the leader with The Tonight Show with Jay Leno at 11:35 p.m., where it averages 2.8 million viewers and is even at a 0.8 year to year among late-night’s key demographic of adults 18-49. Following Leno, Late Night with Jimmy Fallon at 12:35 a.m. is up 4% among adults 18-49 to a 0.6, and is averaging 1.5 million total viewers. In February, Fallon will take over The Tonight Show, and is expected to bring his cadre of young viewers with him.
On CBS, Late Show with David Letterman and the Late Late Show with Craig Ferguson air opposite Leno and Fallon. Letterman averages 2.4 million viewers, and is down 13% for the year to a 0.5 among adults 18-49. Ferguson, meanwhile, averages 1.2 million viewers and is down 9% for the year among adults 18-49 to a 0.4.
In January, ABC’s Jimmy Kimmel Live switched with ABC’s Nightline at 11:35 p.m., which will put that show’s last half-hour head-to-head with Arsenio in most top markets come September. Moving up an hour, JKL ratings naturally rose across the board compared to its performance in the later time period, given the fact that more people are watching TV earlier in the evening. However, compared to Nightline at 11:35 p.m. in 2012, household and demo ratings alike dropped in the time period.This is a point ABC execs have said they expected and planned for in making the switch, knowing that they can get ad premiums for entertainment programming in the time period that they couldn’t capture with news.
Cable also has become a late-night battleground. The man who would have had The Tonight Show chair, Conan O’Brien, is now firmly ensconced at TBS, where his show is signed through 2015. Conan is averaging 850,000 viewers, down 20% from last year’s 1.02 million. Conan also is down 19% among adults 18-49, dropping to a 0.4 from last season’s 0.5 in that key demo.
From a ratings point of view, Comedy Central’s The Daily Show with Jon Stewart at 11 p.m. is the Jay Leno of cable late night, leading the pack with a 2.7 household rating, down 7% from last year, and an average of 2.1 million viewers. Stewart’s closest competition comes from his spin-off, The Colbert Report, which averages a 2.5 in households, even compared to last year, and 1.6 million viewers, up 1% from last year.
In most markets, The Daily Show and Colbert Report will provide the most direct competition to Arsenio, since Daily Show starts at 11 p.m. However, both of the Comedy Central shows are political satires, while Arsenio will be a general entertainment program more akin to the broadcast network shows with talk, music and comedy.
Over at E!, Chelsea Lately has garnered a small but stalwart audience of loyal fans at 11 p.m. And on July 17, ESPN2 announced that veteran commentator Keith Olbermann would be hosting a sports-focused show, also at 11 p.m.
The best-case ratings scenario for Arsenio Hall— as it is for all syndicated shows—is that it beats its year-ago time period performance and improves upon its lead-ins.
Last September, Tribune’s WPIX New York was airing repeats of Seinfeld at 11 p.m., and they were averaging a 0.9 rating/2 share. Similarly, KTLA Los Angeles, with repeats of Friends, was in that same range at a 0.9/2. WGN Chicago, with a double-run of Family Guy, averaged a 1.1/3 in the time slot. If Arsenio turns in similar ratings in year one, Tribune will consider it a success. Tribune is keeping far more of the advertising inventory in Arsenio than it was in those off-net sitcoms.
Gearing Up for the Long Haul
All of that competition, combined with the sheer workload, is enough to make most people flee in terror, or at least offer a polite ‘no, thank you’ and walk away.
It is so much work,” Hall admits, “and there are differences this time around. I’ve done the work before, but I’m also older and I need a nap sometimes. I don’t know how Leno does it.”
That said, he seems up for all of it. When Hall isn’t making the rounds at local affiliates, he’s in his production office at Hollywood’s Sunset Bronson Studios or at a red-carpet event. Since the show was announced last summer, Hall has appeared at every relevant event, from NATPE in January to the PromaxBDA Station Summit in June to any other place where he could resurrect the “woof!” call and promote his show.
“He’s got the energy of a 20-year-old,” says CTD’s FitzPatrick. “In our building there are three flights of stairs and he bounds up and down those stairs many times every day.”
On July 15, a little less than two months until premiere, Hall said he could finally look out of his office and see a full staff in place, chatting in the hallways, grabbing coffee, making things happen. While CTD is building a soundstage, currently the place looks like any other office complex—lots of cubes, lots of people, lots of paper flying around.
Arsenio’s staff is led by Hall himself—who says he’s literally talked to thousands of people in trying to find the right fits—and executive producer Neal Kendall, who joined Arsenio from PBS’ Tavis Smiley. Hall and Kendall were recently joined by former Arsenio staffers Claudia Cagan and Makiko Ushiyama, who are reteaming with Hall as senior talent producer and producer, respectively. Hall and his team have also hired a full writers’ room, which includes people who have written for Leno and EllenDeGeneres.
“I’m really serious about the work,” Hall says. “I like people to prepare. Don’t come in not understanding Conan and Jay if you want to work with me.”
Back to the Future
“We are looking to do a 21st century version of what Arsenio did on his original show. Late night is a pretty tried-and-true format, and we’ve all been stealing from Steve Allen since the 1950s,” says Kendall. “I look at it as Arsenio just took a long weekend— it just happened to be a 19-year weekend.
“This show is going to have everything that viewers who watch late night have come to expect— monologues, sketches, guests, music, audience participation. We’re going to use everything at our disposal in the year 2013.”
Right now, Kendall is focusing on “setting up the processes by which you can run a daily show and have it run smoothly. One of the things I’ve been preaching to everyone here is that if we do this right, going through all of the nuts and bolts of everything right now, that will set us up for the long run,” he says. “Most of the early work is just mundane: setting up software programs, figuring out how the script department will interface.”
Hall also knows that there’s a lot of talk about attracting the younger demographic, but getting those young eyes away from iPhones and on to TV is a challenge. One of the show’s first hires was Paul Raff, who formerly was a supervising producer at Jimmy Kimmel Live. While neither Hall nor Kendall will reveal their digital strategy, they plan to be all over the Internet. Hall is something of a viral pioneer, with about 2 million combined views of various YouTube videos of President Clinton playing the sax on Hall’s old show.
“You can’t predict whether something will go viral,” says Hall. “You just have to do good work and hope it does.”
Arsenio’s marketing campaign kicked off early, with CTD distributing “The Woof Man Is Back” online and to local TV stations in December.
“You hear so much about going after the young demographic, but when demographers in my business talk about the Jay Leno/Jimmy Fallon demo, they are really talking about people in their late 40s or early 50s. It’s hard to find a 25-year-old that turns on the TV consistently. When they are talking about the young demo in late night, they are talking about 48-year-olds,” says the 57-year-old Hall, who has a teenage son he looks to when trying to figure out how young minds approach pop culture.
Late night may be the most competitive it’s ever been, but Arsenio’s peers are welcoming him back with open arms. Or at least sarcasm, which may be the same thing for a late-night comic.
Said Rob Burnett, executive producer of Late Show With David Letterman, on which Hall will appear on Friday, Sept. 6, just days before his own show premieres: “It is a testament to Arsenio’s talent and courage to start a new talk show without legally changing his name to Jimmy. We wish him the best.”
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