Why the Time Is Right for Conan O'Brien

Conan O'Brien
Conan O'Brien

Whatever Time Warner's (TWX) TBS cable channel is paying Conan O'Brien probably isn't enough.

It's not just that O'Brien's new talk show Conan, which debuted on Nov. 8, is attracting a huge audience -- more than 4.1 million for its first night -- but they were young as well. The median age was 30, the youngest audience in late-night TV, even beating rivals The Daily Show with Jon Stewart and The Colbert Report by a few years. If that trend holds, it would be a huge win for TBS.

Advertisers are willing to pay a premium to reach younger viewers because they're so difficult to find. TBS, the No. 1 cable network among viewers 18 to 34, knows this well. According to The New York Times, the channel is charging $30,000 to $40,000 for a 30-second commercial spot on Conan, which is comparable to what NBC and CBS charge for commercials on The Tonight Show With Jay Leno and the Late Show With David Letterman.

"We expected the Conan audience to be young, but it's even younger than anticipated," says TBS spokeswoman Karen Cassell in an email. "The feedback from our advertisers to Conan's initial audience delivery has been very positive. For the opening two nights, Conan has attracted strong, young demographics with reach that our advertising partners desire for their brand messages."

Taking Pay Cuts

O'Brien has joked that he's getting less money than he did at NBC. Advertising Age's Brian Steinberg even argued that O'Brien went overboard with his jokes about the cable and broadcast networks. But those jibes have a personal side as well: His writers reportedly grumbled about taking pay cuts to move from NBC to TBS, according to the New York Post.

Though O'Brien and his staff may be earning less, TBS probably is spending close to the $60 million Fox was prepared to shell out on a show starring the comedian, according to Mediaweek. "By comparison, the short-lived Tonight Show with Conan O'Brien cost NBC $85 million to $90 million altogether, including the host's estimated $12 million salary," the trade publication says.

Advertisers are willing to bet on O'Brien for now. Among the companies on board with Team Cocoa are AT&T (T), News Corp.'s (NWS) 20th Century Fox and Coca-Cola (KO), the Times says. But don't read too much into their participation. Advertisers are always eager to be in on the launch of a new show, particularly if it's generating lots of buzz. Conan had plenty of that.

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Conan's debut topped his rivals including Jay Leno, who pushed him out of his hosting job of the Tonight Show and made him a pop culture martyr. Conan also smoked his cable competition, The Daily Show and Colbert Report, which each attracted about 1 million viewers.

Nonetheless, Stewart needn't lose sleep over O'Brien -- at least not yet. "Despite having direct late-night show competition for the first time, The Daily Show was pretty resilient in total viewers, down a modest 13% from its season-to-date Monday viewer average," according to Deadline Hollywood. "As for Comedy Central's The Daily Show and Colbert Report, O'Brien actually has a chance to upstage them, at least initially, because of the timing for his launch. The Comedy Central shows thrive in busy political times. With the November elections behind us, there is enough political fatigue to give Conan an opening."

Looks like he's taking advantage of it.