TERENCE SMITH: Joining us now is Bill Carter, the chief television correspondent of the New York Times, who broke the story in today's paper. Bill Carter, welcome.
BILL CARTER: Nice to be here.
TERENCE SMITH: Reading your story, it sounds like Macy's raiding Gimbel's. What is going on here?
BILL CARTER: Well, it's essentially a network that has a successful late night show a long-term franchise but one that feels is not the best idea going forward, looking at the landscape and saying here is the really big star in late night who is available and we're going to go after him to improve our standing and make more money.
TERENCE SMITH: And did anyone consult Ted Koppel or ABC News?
BILL CARTER: They did not. In fact, until last night when I started making my calls to let people know what was going to be in the paper today, Ted Koppel and his staff and the management of ABC News had no idea that the management of the network was negotiating with Letterman to give away the "Nightline" time slot.
TERENCE SMITH: Why would David Letterman, who makes a handsome salary where he is, want to leave CBS for ABC?
BILL CARTER: Well, there are a lot of little factors that are in play that aren't about money, which are: his standing vis-à-vis Jay Leno and whether or not he could be more competitive on ABC, whether ABC's audience matches up with his audience. CBS's audience has always been older and more rural than his audience, which is obviously an urban and younger audience. He always tends to have difficult relations with his employers, and that's been the case here a bit, too.
TERENCE SMITH: But it sounds like, at least from ABC's point of view, it is about money.
BILL CARTER: Well, it is about money because they don't think the franchise going forward with "Nightline" and "Politically Incorrect" is competitive financially. In fact, they say it's losing money, about $10 million a year. The entertainment show could maybe generate $50 million in profits.
TERENCE SMITH: So that could be a huge difference in the bottom line.
BILL CARTER: Exactly. And ABC needs that because they're suffering through a very difficult year. Their prime time is performing very poorly this year.
TERENCE SMITH: Maybe I'm naïve, but wouldn't ABC be criticized or would they be criticized for sacrificing a very well-established news program?
BILL CARTER: There's no question that that's a factor. This is not just a well established news program. This is a legendary program headed by one of the biggest figures in recent television news history, Ted Koppel. So they had to calculate the risk of that versus the possibility of the upside of getting David Letterman.
And they were willing to take that chance and go even further because they had to convince Letterman that he would not be the reason they were dropping "Nightline", but that they intended to drop "Nightline" whether they got Letterman or not. They have gone the extra mile and basically said that to me, that they're committed to make a change in late night whether they get David Letterman or not.
TERENCE SMITH: And what does that tell you about the priorities of the network in terms of the news, where they stand in the pecking order?
BILL CARTER: I think it says that right now, especially at ABC, which is in a bad financial position, they can't afford to take the position that news is more important than profits. Right now, profits seem to be the most important thing to ABC.
TERENCE SMITH: And those profits would be greater, as I understand it, from your article, because even though the ratings of the two broadcasts, "Letterman" and "Nightline" are quite similar, in many respects, the Letterman audience is the more desirable?
BILL CARTER: Correct. They both have about 4.5 million viewers for that half-hour period. Letterman of course is an hour-long show and "Nightline" is half an hour. But the audience for Letterman is younger; it's particularly good in young men. And those are very hard to reach for advertisers. So they'll pay a premium to reach them. The news audience tends to be a 25- to 54-year-old audience. And there are a lot of them available in television. You can find them all over the place. So that makes them less valuable to an advertiser. They want to find younger audiences, particularly younger men.
TERENCE SMITH: IN fact, we have something coming up in the next segment about younger audiences. From "Nightline"'s point of view is there another place on the schedule, another place to go?
BILL CARTER: Well, I don't know whether "Nightline" would accept that. Certainly ABC wants to present some possibilities to Mr. Koppel and to "Nightline" and I think you could argue that "Nightline" might be a valuable property elsewhere, perhaps, somewhere else in television. There are a lot of cable news networks out there. If they could afford a "Nightline", I'm sure they would love to have Ted Koppel. So I don't think this means the end of Ted Koppel's career. I hope not. I think it only means that they want — if they can get David Letterman, they're going to do anything they can to get him.
TERENCE SMITH: Would it be fanciful and silly to expect CBS to turn around and bid for it?
BILL CARTER: To bid for "Nightline"? It would be fanciful and silly, I'm afraid. They would go for an entertainment show as well because they've now established a late night entertainment franchise with Letterman. They never had one before. I think they would instantly try to hire someone else in the entertainment realm, if only to challenge Letterman, because if Letterman leaves they're not going to be happy.
TERENCE SMITH: So that sounds like the money talking again.
BILL CARTER: It sure does.
TERENCE SMITH: Tell me this. ABC News and "Nightline" certainly and ABC news itself, is actually a small cog in a much larger conglomerate — Disney. How much of a factor is that when it comes to the pecking order we were talking about before?
BILL CARTER: I think it is a significant factor in the sense that unlike the cable network, cable news networks, ABC News is now in a diminishing world. It can't cover news the way the cable news networks do, so it has, it has only a certain number of programs it can do. There is a limited upside to that. So its priority inside a big company like Disney, obviously diminishes compared to what it would be if they had a 24-hour news network. ABC did try to establish that at one point, and it didn't go through. If it had, I think their news would have a lot more influence inside Disney.
TERENCE SMITH: And the "Nightline" viewers, these 4.5 million people you've been talking about, have they been heard from?
BILL CARTER: They haven't fully weighed in yet but they've been sending e-mails and making some of their opinions known. I think what you have to realize is this is not a fait accomplis because Letterman has not decide what had he is going to do and if he doesn't do it, I don't think ABC has an easy alternative, and probably would at least for the time being say "we're sticking with "Nightline" because they don't have another alternative to Letterman, an entertainment alternative. It is a little bit complicated. I do think there is a big question whether Letterman will take this because it is a risky deal for him.
TERENCE SMITH: Give it a probability on the scale of one to ten.
BILL CARTER: I'd give it a two.
TERENCE SMITH: A two? Very low then.
BILL CARTER: I think it's about a 20 percent chance right now.
TERENCE SMITH: Okay. Bill Carter, thank you very much.
BILL CARTER: Nice to be with you.