CBS' cancellation of Colbert underscores tough economic times for TV

CBS says its decision to end Stephen Colbert’s late-night comedy show is financial, not political. Yet even with the media's skepticism about that explanation, there’s no denying the economics were not working in Colbert’s favor.

The television industry’s declining economic health means similar hard calls are already being made with personalities and programming. For the late-night genre, there are unique factors to consider.

As recently as 2018, broadcast networks took in an estimated $439 million in advertising revenue for its late-night programs, according to the advertising firm Guidelines. Last year, that number dwindled to $220 million.

On the expense side of the ledger, the "Late Show" reportedly costs $40 million to produce, and Colbert's salary is said to be $15 to $20 million annually. That's all to draw an audience of 2.4 million. In the Jay Leno era of late night, similar salaries were paid, but resulted in audiences of more than ten million. In the 1990s, David Letterman averaged around 13 million nightly viewers.

Late-night TV was previously a particular draw for young men, considered the hardest-to-get and most valuable demographic for advertisers. Increasingly, these viewers are turning to streaming services, either to watch something else entirely or catch highlights of the late-night shows, which are more difficult for the networks to monetize.

More broadly, the much-predicted takeover of viewers by streaming services is coming to pass. The Nielsen company reported that during the last two months, for the first time ever, more people consumed programming on services like YouTube and Netflix than on ABC, CBS and NBC or any cable network.

Networks and streamers spent roughly $70 billion on entertainment shows and $30 billion for sports rights last year, said Brian Wieser, CEO of Madison & Wall, an advertising consultant and data services firm. Live sports is the most dependable magnet for viewers and costs for its rights are expected to increase 8% a year over the next decade. With television viewership declining in general, it’s clear where savings will have to come from.

Wieser said he does not know whether Colbert’s show is profitable or not for CBS and parent company Paramount Global, but he knows the direction in which it is headed. “The economics of television are weak,” he said.

In a statement announcing the cancellation, George Cheeks, Paramount Global’s president and chief executive officer, said that “This is purely a financial decision against a challenging backdrop in late night. It is not related in any way to the show’s performance, content or other matters happening at Paramount.”

Some experts questioned whether CBS could have explored other ways to save money on Colbert. NBC, for example, has cut costs by eliminating the band on Seth Meyers’ late-night show and curtailing Jimmy Fallon’s “Tonight” show to four nights a week.

Could CBS have saved more money by cutting off the show immediately, instead of letting it run until next May, which sets up an awkward “lame duck” period? Then again, Colbert will keep working until his contract runs out; CBS would have had to keep paying him anyway.

CBS recently cancelled the “After Midnight” show that ran after Colbert. But the network had signaled earlier this year that it was prepared to continue that show until host Taylor Tomlinson decided that she wanted to leave, noted Bill Carter, author of “The Late Shift.”


(Photo by Richard Shotwell/Invision/AP, File)