CBS Offers Letterman Lucrative Deal : Television: Pact calls for $14-million annual salary and the coveted 11:30 p.m. time slot.

By JOHN LIPPMAN

Dec. 8, 1992 12 AM PT

TIMES STAFF WRITER

CBS made a formal proposal for late-night talk show host David Letterman late Monday, offering to double his NBC salary to about $14 million a year, network executives said. Letterman would become one of the highest-paid performers on television under the deal, which would put him in direct competition with NBC’s “The Tonight Show,” hosted by Jay Leno.

Letterman’s NBC contract expires next summer. The network has about four weeks to make a counteroffer if it wants to prevent Letterman, who currently follows Leno, from jumping ship.

CBS, which overcame rivals such as the Fox Network and Viacom International, has guaranteed Letterman the 11:30 p.m. time slot he’s seeking. The deal also includes incentives. Leno makes about $3 million a year. Arsenio Hall, whose late night show is syndicated, is said to take in $20 million annually.

Spokespersons for CBS, NBC and Creative Artists Agency, which represents Letterman, declined comment on the offer.

NBC last month agreed to allow Letterman to negotiate with potential suitors in exchange for extending his commitment to stay on NBC from April until June, 1993.

Network sources said that CBS has offered Letterman a two-tier commitment that includes allowing him to produce his show, in addition to a generous personal compensation package.

“He will be a very rich man,” one network executive said.

CBS would commit to Letterman for a minimum of two years and possibly four.

People familiar with the plan says the network estimates a Letterman show at 11:30 p.m. on CBS could generate about $75 million annually in advertising revenue. By contrast, “The Tonight Show” pulls in about $100 million a year.

In addition, CBS thinks it would cost about $400,000 a week to produce Letterman’s show--less than half what it costs to produce a one-hour prime-time series.

Snaring Letterman would be a coup for CBS, which has a spotty history in late-night programming. The network has tried a variety of formats in recent years--from reruns to Pat Sajak to the current “crime time after prime-time” lineup, but has lacked a stable franchise like NBC has with “The Tonight Show” and ABC has with “Nightline.”

One problem for CBS, however, is that about 40% of its affiliates have dropped the network’s late-night programs in favor of syndicated shows. That means fewer stations would carry Letterman’s show, which could hurt his ratings. That could be rectified in coming years, as syndication pacts expire.

“Late Night with David Letterman,” has been the linchpin in NBC’s late-night schedule and one of the few time slots where the network has consistently been a ratings leader.

But Letterman has become bitter at NBC in recent years, complaining the network has been insensitive to the success of his program. That anger erupted last year when NBC chose comedian Jay Leno over Letterman as Johnny Carson’s successor on “The Tonight Show.”

NBC is now in a difficult position if it wants to keep Letterman. One of Letterman’s conditions in dealing with suitors is that his show be put on at 11:30 p.m. or earlier. It was that condition which ruled out ABC because it refused to bump “Nightline” from 11:30 p.m.

Senior industry observers believe that NBC has little choice but to dump Leno and give Letterman the job of hosting “The Tonight Show” if it wants to keep him.

But an NBC executive disputed that scenario. “We are not going to give (Letterman) 11:30 p.m.,” the executive said.