McMahon: The price of keeping Colbert

Move over, Jimmy Fallon.

Gov. Andrew M. Cuomo announced last week that New York State will steer $16 million in subsidies to CBS to keep the “Late Show” in Manhattan under its next host, Stephen Colbert.

The deal is just the latest in a series of lucrative state tax giveaways to the entertainment industry — part of a national trend, even though Cuomo’s own tax reform commission last year suggested that credits for movies and TV don’t really pay for themselves.

Last year, NBC secured tax breaks estimated to be worth at least $20 million to help finance its move of the “Tonight Show” from Burbank, California, back to Rockefeller Center, where it originated in the 1950s. This was made possible by a 2013-14 state budget provision that extended New York’s already generous film and TV tax credits to “a talk or variety program that filmed at least five seasons outside the state prior to its first relocated season in New York.” That language was so obviously tailored to NBC that it became known in some quarters as “Jimmy’s Law.”

Once the peacock network had cashed in, it was inevitable that competitors would seek a similar handout. CBS, however, is in a different situation. The “Late Show” has been broadcast for 21 years from the Ed Sullivan Theater on Broadway, which CBS spent heavily to renovate (without taxpayer subsidies) for longtime host David Letterman, who will retire in early 2015.

Even in New York, it’s difficult to justify relocation incentives for a TV show that’s already here. So Cuomo found another way to channel money to CBS: combining an outright grant of $5 million for (more) renovation of the Ed Sullivan Theater with $11 million in “performance-based Excelsior tax credits” over five years.

By law, Excelsior incentives are targeted specifically to financial services, manufacturing, software development and new media, scientific research and development, agriculture, back-office operations and distribution centers. Late-night talk shows don’t make the list. CBS, however, apparently will qualify under an additional, catchall category that also extends incentives to “an industry with significant potential for private-sector economic growth.”

The premise behind the CBS tax breaks is that the “Late Show” and 200 jobs might have moved away without them. In reality, if Colbert hosted his show in Los Angeles — as Jay Leno used to do on NBC, before giving way to Fallon — it would have caused barely a ripple in the city’s economy. It’s not as if the Ed Sullivan Theater would have gone unused.

And was a move really all that likely in any event? After all, Colbert made a name for himself hosting a talk show before a live audience in Manhattan. And in brand marketing terms, the “historic” Ed Sullivan Theater is to CBS what the 30 Rockefeller Center studios are to NBC — virtually synonymous with the network.

Faced with the prospect of uprooting staff and possibly losing key personnel by moving across the country, CBS’ decision to keep the “Late Show” in New York City “was as close to ‘foregone’ as the word could possibly imply,” critic Verne Gay wrote on Newsday’s TV Zone blog.

Unlike many less glamorous businesses unable or unwilling to pull up stakes from their longtime homes on Long Island or the Bronx or upstate, CBS will get a multimillion-dollar sweetener to keep the laughs coming from the same place.

The joke, it seems, is on us.

E.J. McMahon is president of the Empire Center for Public Policy.