LENO-The MVP of Late Night

BraveLiver

LENO
The MVP of Late Night
To Jay Leno, show business is no joke: Inside the workaholic, high-octane, semi-obsessive, top-grossing world of television's biggest star.
By Marc Gunther


All night long the fax machine at Jay Leno's house spits out jokes. It delivers jokes about President Bush, the Democrats who want to unseat him, Martha Stewart, Michael Jackson and his sister Janet's breast. All during the day Leno's writers type more jokes onto index cards and drop them into the Styrofoam bowl labeled jokes here that sits on his hopelessly cluttered desk at NBC. They send him oddball stories from the papers, too, like the one about the minor-league pitcher for the Indians who apologized for appearing in a gay porn video, saying he had made a mistake when he was young. "You ever notice everyone who makes porn movies always claims they did it because they were young?" Leno says later, on The Tonight Show. "Of course they were young! Nobody asks old people to be in porn movies! 'All right, Grandma, drop the support hose!' " He lives off the story for days.

Jokes are oxygen to Leno. It is his peculiar talent to pick over jokes, news items, and tidbits of information—he gets about 200 to 300 submissions a day—select the funniest of the crop, and fashion them into an 11-minute monologue that will persuade millions of Americans to stay up later than they probably should for a humorous take on the events of the day:

How many of you watched that halftime show on Sunday? Or as they're calling it now, America's Cup.

CBS said today that's why they put that XXX in the title. That's not the Roman numeral, it's the rating!

Earlier today, President Bush admitted that his prewar intelligence wasn't what it should've been ... but, hey, we knew that when we elected him!

Today Homeland Security Chief Tom Ridge raised the security alert to Code Red.... Apparently Howard Dean has escaped!

I tell you, I feel great. I'm on that new Joe Lieberman diet. No matter what I do, I keep losing and losing and losing.

Speaking of that—Ragu announced this week that they have come out with a low-carb spaghetti sauce. Which really works great ... UNTIL YOU POUR IT ON SPAGHETTI!

Funny is money, someone said about television, and right now there is no entertainment program on network TV as profitable as The Tonight Show. NBC doesn't break out figures for its shows, but FORTUNE has learned that Tonight generates annual operating earnings of $100 million, or about 15% of NBC's profits. Unlike much of network television, it's a very good business. The show costs about $1.5 million a week to produce, far less than a single episode of Friends or ER. It generates about $3.5 million weekly in ad revenues from sponsors like movie studios, car companies, and technology firms, which pay roughly $55,000 to $65,000 for a 30-second spot. The bottom line: Since Leno became the host in 1992, The Tonight Show has generated close to $1 billion in profits for NBC.

That makes the 53-year-old jokester television's MVP—its Most Valuable Performer. In the past year or so, after a decade-long war of wits in late night, Leno has emerged as the clear winner. The Tonight Show has been averaging about 6.1 million viewers a night, compared with 4.3 million for CBS's Late Show With David Letterman. Somewhat improbably, Leno enjoys a hefty 44% advantage over the edgy Letterman among the viewers ages 18 to 49 whom advertisers want to reach.

Tonight has been a cornerstone of NBC since Eisenhower was President, and you might think its value would have faded over time. Quite the contrary. Because coming up with new hits has become so difficult in a 150-channel universe, franchises like Tonight and its morning counterpart, Today, are more important than ever. "Great series will come and go in prime time," says Jeff Zucker, president of NBC Entertainment. "But The Tonight Show and The Today Show will always be there."

Late-night television is a star-driven business. Letterman's show is the favorite of comedy cognoscenti. NBC's Late Night With Conan O'Brien has won over Gen Xers. Jon Stewart's Daily Show on Comedy Central has taken political satire to new heights. All are reliable moneymakers for their networks, but none of them hold a candle to Tonight as an entertainment business. Bob Wright, NBC's longtime CEO, says, "There are very, very few people who, like Jay, can stand up there with new material, every single night, night after night, and be appreciated by a very broad audience." Just ask Chevy Chase, Joan Rivers, Pat Sajak, Magic Johnson, Bill Maher and Keenan Ivory Wayans. Stu Smiley, a veteran television producer who now runs the Aspen Comedy Arts Festival, says, "Jay is a classic the way Bob Hope was a classic."

Even so, Leno's victory in the late-night wars comes as something of a surprise, and not just because an NBC casting director once told him that his face could scare small children. When Leno took over the Tonight desk from Johnny Carson, he stumbled. NBC executives seriously considered replacing him with Letterman. When they didn't—GE Chairman Jack Welch urged them to stick with the "loyal guy"—Letterman defected to CBS and beat Leno in the ratings for a couple of years. "Jay just put his head down and wrote three more jokes every night," recalls Bob Wright. "Talent by itself is not necessarily reliable. He has talent, and he is willing to work long hard hours at it."

Indeed, Leno understands that there's more to show business than putting on a show. He is a quirky man—hot liquids never touch his lips, and he eats the same thing for lunch every day for a year—and among his quirks, it turns out, is an intuitive grasp of business. He has a prodigious appetite for work. He earns almost as much money in his spare time as he makes at NBC. He acts as his own agent. In an industry where stars often demand to be indulged, he is an affable team player. Above all, he is a relentless salesman—he will go almost anywhere and do almost anything to win friends and influence people. "Show business is not hard," he tells FORTUNE. "It's all just basic Dale Carnegie stuff."

NBC pays Leno about $16 million a year. Yes, he's probably worth more. CBS pays Letterman about $31 million. Letterman also owns The Late Show and the talk show with Craig Kilborn that follows it, while Leno remains a hired hand. But Leno scoffs when people tell him he's getting screwed. "How am I getting screwed?" he asks. "I've got a house in Beverly Hills." Besides, Leno runs a nice little business on the side—his standup act. He does about 125 to 150 performances a year for a minimum of $100,000 a gig. That brings in another $12 million to $15 million per annum. A frequent headliner in Las Vegas, Leno also has become corporate America's favorite funnyman. His clients include the automakers, Microsoft, Goldman Sachs, and those wild and crazy guys at Ernst & Young.

"I write jokes. I tell jokes. I get paid," he likes to say. Of course, it's not quite as simple as that.