Newsweek - David Letterman Article

On Sunday, January 10, the phone rang at Jay Leno's home in Beverly Hills. On the line was Robert Wright, president of NBC, calling to discuss the network's agonizing, monthlong debate over whether to replace Leno with David Letterman as host of The Tonight Show.

"Jay," said Wright, "this is going to be the toughest decision we've ever had to make." "I'm not going to ask who you're picking," Leno responded. "All I want to do is tell you my case." Then Leno launched into a sales pitch, stressing his popularity with viewers, advertisers and affiliates. "Everything will turn out fine," Wright assured him. Leno turned to his wife. "At least the guy called me," he said. "Isn't that a good sign? Isn't it?"

Four days later, Leno received the official word from NBC Entertainment president Warren Littlefield: Leno would stay on as host of The Tonight Show and Late Night host Letterman would defect from NBC, his home for 11 years, to launch a rival talk show at 11:30 on CBS. In a lovefest at CBS's Black Rock headquarters, an ecstatic Letterman thanked his ardent suitor, CBS Broadcast president Howard Stringer, for his "generosity" ($42 million over three years, plus ownership of his show), gave CBS chairman Laurence Tisch an affectionate pat and waxed positively rhapsodic about his new home. "As a kid in Indiana, CBS always impressed me as a place...with unbelievable comic talent," he gushed. "I'm flattered to be part of that heritage."

It was a fitting conclusion to television's deal of the decade, which dragged on for several tense months, generated a media feeding frenzy and brought together the entertainment world's most influential players in a byzantine, highly secretive negotiation. They included Michael Ovitz, the powerful head of Hollywood's Creative Artists Agency, which represented Letterman; General Electric chairman Jack Welch and his two colleagues, Wright and Littlefield; CBS chairman Tisch,
entertainment head Jeff Sagansky and Stringer, a gregarious wheeler and dealer who had quietly wooed the Late Night star
since 1991.

For Stringer, stealing Letterman from NBC would easily mark the coup of his five years as the network's president; it would make CBS a formidable player in late-night TV for the first time in history, cement the loyalties of its 200-plus affiliates and give the resurgent network strong visibility among young viewers, who have largely shied away in favor of NBC, ABC and Fox. In mid-December, CAA informed NBC that Letterman had accepted Stringer's offer -- and gave the network 30 days to make a better bid.

Over the next few weeks NBC head of productions John Agoglia, the network's point man, pitched a dozen counterproposals to CAA. But Letterman turned down comparable money, a variety of production deals, even a nightly prime-time variety show. (The 10 o'clock audience, he feels, isn't as young or hip as his late-night viewers.) In desperation, NBC even offered to move The Tonight Show to 10 o'clock to give Letterman an 11:30 program following the evening news. But Letterman had made it clear that nothing would satisfy him short of becoming host of Tonight which would mean NBC's sacrificing Leno. "I had come to terms with the idea of coming to CBS," he told NEWSWEEK. "Because I did not believe there was anything NBC could do to keep me where I was."

Still, NBC was determined to take one last shot. On Thursday, January 7, a score of NBC senior executives gathered at a Boca Raton resort for the network's annual planning conference. One subject dominated the discussions: what to do about Dave? Wright was leaning toward Letterman, convinced that losing the star would be a blow NBC couldn't afford.

Littlefield, never close to Letterman, backed Leno. In a gathering reminiscent of the famous scene from "Network" in which the "UBS" network head polls sides about whether to kill off anchorman Howard Beale, Littlefield and Wright, who had made the decision in 1991 to hire Leno -- and who remained under pressure to justify it -- interrogated their division commanders about the impact of giving Letterman Leno's job.

The ad-sales chief talked about ratings; the head of affiliate relations spoke of Leno's ties to NBC stations. On Friday, Wright flew back to New York and Littlefield returned to LA -- with the network still undecided. What happened next is disputed by both sides. According to NBC, Wright, Littlefield and their boss Jack Welch took a last look at the numbers. What would it cost NBC to match CBS's offer? A staggering $50 million the first year -- including a $14 million salary, roughly $25 million to Letterman's company to produce the show and about $10 million to Leno as a contractual payoff if they replaced him

What would they get? They'd lost their 11:30 host, whose ratings climbed from 4.6 in November to 4.8 in December, and face a hole an hour later. Even more disturbing, a group of NBC affiliate managers had lobbied for Leno and suggested they might not run Letterman if he took over Tonight. And the prospect of Leno's bolting to CBS, as he threatened to do, was unpalatable. "If Jay started whipping Dave in the Nielsens," says an NBC executive, "that would be more than just embarrassing for us. It would be a total nightmare."

SOUR ON NBC: But there's another version of the story. Sources close to Letterman insist that on Sunday, January 10, NBC executives phoned CAA and, in a highly confidential discussion, made a "concrete, specific" proposal: NBC would give Letterman The Tonight Show, though not for immediate occupancy. Under this scenario, which NBC denies, Letterman
would take over in June 1994. Once word of the deal leaked out, the executives predicted, Leno would resign, sparing NBC
the onerous penalty. But on Monday Letterman turned the offer down. The money wasn't as good as CBS's offer, a source says, and the deal didn't include ownership of the show. And there were emotional considerations. Letterman had soured on NBC and wanted a change in his career.

Yet an NBC executive states flatly, "At no point did we offer Letterman The Tonight Show," But Leno doesn't discount it. "NBC has told me that's absolutely not true," he told NEWSWEEK "but if they did, that's fine." Letterman's rejection of NBC's alleged last-minute bid, a source says, made the CBS deal all but official.

CAA called Stringer that afternoon and told him it "looked like" Letterman would jump. Still, Stringer was nervous. "At the last minute I feared somebody would call down from the GE hierarchy and shout, 'I've changed my mind,'" he says. But Thursday morning the game ended: Wright sent Letterman a note praising him as "a great star" and telling him, "We'll miss you." At 5 o'clock Littlefield phoned Letterman as he prepared to tape Late Night. Coexecutive producer Peter Lassally took the call, and Littlefield wished them goodbye -- and good luck. Letterman will premiere his CBS show this August, and in the early months at least it shouldn't be very different from the old Late Night. He'll remain in New York for now (though he's contemplating a move to LA) and he's sure to bring Late Night bandleader Paul Shaffer, Lassally, coexecutive producer Robert Morton and his top writers.

But CBS is hardly guaranteed an easy victory. Roughly one-third of CBS's stations have commitments to syndicators to carry other shows at 11:30. To gain "clearances," the network may have to sweeten the compensation it pays affiliates and spend millions more to buy out the contracts of stations locked into other deals. CBS has already begun pressuring the 11 affiliates who carry "Arsenio Hall" at 11:30 to drop the Paramount-syndicated show. Betsy Frank, a senior vice-president at Saatchi &
Saatchi, calls CBS "the wrong network" for Letterman: "CBS's audience is older and more female (than NBC's)," two groups
that aren't his most ardent fans. And Dave's cantankerous personality and often ironic humor, she says, "is more suited for the younger 12:30 audience." But NBC, which earned at least $20 million in profits from Late Night, is likely to be the real loser.

Reportedly on the block, it's even less of a commodity minus Letterman. In its place, NBC has hired Saturday Night Live creator Lorne Michaels to produce a comedy-variety show, possibly to star SNL's Dana Carvey. (But sources have said the only way Carvey would do a 12:30 show is if he could follow Letterman.)

All the naysaying about his adaptability has Letterman on edge. "It affects your confidence," he says. Mostly, however, TV's loosest cannon seems to be enjoying his new lame-duck status. All last week on Late Night he twisted the knife into his GE bosses, offering his Top Ten reasons for leaving. Among them: "I've stolen as many GE bulbs as I can fit in my garage" and "NBC insists I wear pants."

Considering his $42 million-plus paycheck, his new bosses at Black Rock had better worry about keeping their shirts.
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January 25th 1993
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"The inside story of how NBC dithered -- and lost it's $20 million man"