Leno's Ratings Bump Isn't All Good News for NBC

Now that Jay Leno has returned to host NBC's Tonight Show, the show is climbing back to the top of late-night ratings. In March, Leno outdrew his main rival on CBS (CBS), The Late Show with David Letterman, averaging 4.9 million viewers compared with Letterman's 3.7 million, according to Variety. But the top brass at NBC shouldn't feel vindicated in their decision to reinstall Leno in the 11:30 p.m. time slot quite yet.

"After a couple of early Letterman victories among young adults, Leno has taken a firm lead among total viewers and adults 18-49, and Letterman has lost virtually all the gains he made in Leno's absence,"Media Life Magazine wrote in response to the ratings report.

But the obsession with overall ratings for these shows misses the larger point: The Letterman/Leno audience is shrinking, and it's getting older, two factors that aren't good news to advertisers.

Hipster Hosts With Aging Audiences

Even though the Tonight Show's audience has increased by more than 50% since Conan O'Brien left it in January, it's still down 18% since March of last year, according to Variety's report. Letterman's viewership has shrunk too, falling 5% year-over-year. Making matters worse, the median age of Tonight Show viewers has jumped by more than a decade, to 56, according to The New York Times. Nielsen data shows that the average age of Letterman's viewers climbed to 56 from 54 last year.

Even hipster hosts Jimmy Kimmel and Craig Ferguson are seeing their audiences grow old. The sole exception among the broadcast networks is The Late Show with Jimmy Fallon with a viewership that's clocking in at a youthful 45.5 average age, down from 46.9 a year ago.

The graying of late night has occurred for years, and the trend has long worried advertisers. Marketers will pay top dollar to reach young, hip audiences who have yet to establish brand loyalties. But that younger audience has been watching far less network TV.

"The young viewers are on cable," says Brad Adgate, director of research at Horizon Media. "Young people are not watching the local news."

Following the Viewers

Instead, they're watching edgier fare, such as The Daily Show and Colbert Report on Viacom's (VIA) Comedy Central, and Lopez Tonight on TBS, which all boast audiences that average 40 years of age and younger.Chelsea Lately on Comcast's (CMCSA) E! channel has delivered more young viewers than Kimmel and Ferguson, especially women. Also in that time slot is Time Warner's (TWX) Cartoon Network's Adult Swim, a block of off-the-wall shows that has been the No. 1-ranked ad-supported basic cable network for delivery of adults 18-34 for five years. Competition for younger audiences will grow even more heated once Conan O'Brien debuts his new show on TBS later this year.

Advertisers are following those younger audiences to the cable networks. Total TV ad revenues for 2009 fell 6% to $81.9 billion from year ago, yet cable shares continued to climb, according to the Cable Advertising Bureau. Cable's share of total TV ad revenue rose 4 points to a 29 share, while broadcast fell three points to a 36 share, the trade group says.

Maybe Conan will end up the winner in the late-night wars after all.