Streaming Forcing A Paradigm Shift

Ad revenue decline has forced networks to rethink late-night formats. CBS’s decision to end The Late Show by May 2026 reflects the financial strain, even for a top-rated show.  The decline in ad revenue for late-night TV shows like The Late Show with Stephen Colbert, Jimmy Kimmel Live!, and The Tonight Show Starring Jimmy Fallon is driven by several interconnected factors.

Shrinking Linear TV Audiences: Late-night TV has traditionally relied on live viewership on broadcast networks (ABC, CBS, NBC) or cable (e.g., Fox News for Gutfeld!). However, audiences are increasingly moving to streaming platforms like YouTube, Netflix, and Hulu. Nielsen data indicates that in Q2 2025, streaming services surpassed traditional broadcast and cable in total viewership for the first time. This shift reduces the audience for live late-night broadcasts, which directly impacts ad revenue since advertisers pay based on viewership size and demographics.

Loss of Key Demographic: Late-night shows historically attracted young men (aged 18–49), a valuable demographic for advertisers due to their spending power and difficulty to reach. However, this group is increasingly consuming content on streaming platforms, either watching full episodes on services like Peacock or Hulu or catching short clips on YouTube and social media. These platforms are harder for networks to monetize effectively, as ad rates for digital views are often lower than for live TV, and viewership is fragmented across platforms.

Overall Ad Revenue Drop: According to the advertising firm Guidelines, ad revenue for late-night programs across broadcast networks fell from $439 million in 2018 to $220 million in 2024, a roughly 50% decline. This reflects a broader trend of declining ad budgets for linear TV as advertisers shift to digital platforms with better targeting capabilities and measurable returns. For The Late Show, this translated to annual losses of $40–50 million, as reported by sources, despite its No. 1 rating in its time slot.

Streaming’s Dominance: Streaming platforms offer on-demand viewing, which appeals to younger audiences who prefer flexibility over scheduled broadcasts. Late-night shows, which rely on topical humor tied to daily events, struggle to retain relevance when viewers watch highlights later. Networks struggle to monetize these delayed views, as digital ad rates are less lucrative, and competition for ad dollars is fierce against tech giants like Google and Meta.

Rising Production Costs vs. Revenue: Late-night shows are expensive to produce, with costs including talent salaries, writers, and studio operations. As ad revenue declines, the gap between production costs and income widens. For The Late Show, this led to unsustainable losses, prompting CBS to cancel it despite solid ratings. Other shows, like Jimmy Kimmel Live! and The Tonight Show, have cut back to four new episodes per week to manage costs.

Shift to Sports and Other Live Content: Advertisers are increasingly investing in live sports, which remain a reliable draw for large, real-time audiences. In 2024, networks and streamers spent $30 billion on sports rights, with costs expected to rise 8% annually, per Madison & Wall. This diverts ad budgets from entertainment programming like late-night shows, which lack the same immediacy and broad appeal.