Jimmy Fallon Jay Leno Tonight Show: Could Fallon Takeover Hurt NBC?

On April 3, NBC confirmed that it would not be renewing Jay Leno’s contract as host of the Tonight Show in 2014. Instead NBC will be replacing Jay Leno with Jimmy Fallon, host of Late Night. However, If you were to check on Late Night Nielsen ratings for April 1 to April 5, you might think NBC is about to make an error comparable to the late night fiasco of 2009.  

Go back to any week since May 1992, since Jay Leno took over as host of the Tonight Show. You will find that Leno has consistently had higher ratings than any other late night talk show host. So why would NBC ever want to get rid of Jay Leno? The move has many baffled. Louie CK stated on Howard Stern's program on April 3 2013:

"Jay Leno was one of the best standups ever … I don’t understand it, he’s never ticked down for a second. It’s unbelievable, all he’s ever done is succeed at that job and they want him out. I don’t get it. You’d think in America there’d be some respect for that." 

So what is prompting NBC to oust Jay Leno? On January 8, Jimmy Kimmel Live moved to 11:35 p.m. In a rapid amount of time, Kimmel captured a higher share of key audience demographics than David Letterman from adults ages 18-49. Key demographic ratings are important because entertainment companies can charge higher premiums for advertising on shows that appeal to that demographic segment.

NBC is replacing Leno with Fallon in the hopes that he can capture a younger audience demographic. With the merging of television and the internet, many people (18-49) now use services like Apple TV and YouTube for entertainment and do not watch traditional television. Talk shows that cater exclusively for television audiences are becoming a dying format. So it is understandable how a quick comparison of Kimmel and Leno using their YouTube channel subscription numbers revealing Jimmy Kimmel has over 1.6 million YouTube subscribers and Leno has a mere 24,000 could be alarming to NBC.

However, getting rid of Leno as early as 2014 could be disastrous. The Tonight Show with Jay Leno is one of NBC’s biggest sources of advertising revenues. In addition, Leno’s average audience age is only slightly higher than Fallon’s (Leno 56, Fallon 50). Fallon also only has 330,000 followers on YouTube. Worse of all is that once Jay Leno is free from his contract at NBC, he could go to Fox and eat into Fallon’s audience share.

NBC is also moving the Tonight Show to New York, where Late Night is currently being produced. However, late night audience ratings are guest driven, so it is particularly advantageous to be in California where there are more stars per square mile. That is one of the reasons Johnny Carson moved the show there in 1972.

All of this speculation may be for naught as major network talk shows continue to get replaced by cheaper higher quality cable and online alternatives. Shows like The Colbert Report, The Daily Show, Norm Macdonald Live, and Brand X are making the industry increasingly competitive and fractionalized. Perhaps networks and advertisers need to come to terms with talk shows as a fractionized industry and settle for lower viewership.