Although he was passed over to replace his friend and mentor Johnny Carson in the Tonight Show chair, David Letterman will have the last laugh. The Late Show host has agreed to extend his contract with CBS through 2014, making him the longest-tenured talk show host in history.
While terms of the deal were not disclosed, Letterman  currently earns an estimated salary of $28 million. The linchpin of CBS’ late-night lineup choreographed a similar two-year extension in 2009.
Letterman will celebrate his 65th birthday on April 12.
Also renewing with CBS is Craig Ferguson, the madcap Scottish host of The Late Late Show . Ferguson’s show leads out of The Late Show weeknights at 12:37 a.m.
Per terms of Ferguson’s new deal, The Late Late Show will move to more accommodating digs at CBS Television City in Los Angeles. Ferguson regularly pokes fun at his boxy, poorly lit studio and his program’s parsimonious budget, going so far as to commission the creation of a robot skeleton sidekick, Geoff Peterson , back in 2010.
In keeping with the terms of Ferguson’s new deal, CBS will now co-produce The Late Late Show with Letterman’s production company, Worldwide Pants. Letterman has owned his late-night turf outright since he first joined CBS in 1993.
Before signing the new contract, Ferguson earned an estimated salary of $12.5 million.
“David Letterman is a late-night legend with an iconic show, and Craig Ferguson continues to evolve the genre in exciting and innovative ways,” said Nina Tassler, president, CBS Entertainment, by way of announcing the twin extensions. “These new agreements deliver ongoing high-quality entertainment for our audience and continued strength and stability for CBS in late night.”
The renewals come on the heels of ongoing ratings challenges in late night. Season to date, Letterman's ratings are flat versus last season (3.2 million viewers), but the trend is one of gradual decline. In his second season at CBS, Letterman averaged 7.25 million viewers per night, of which 4.45 million were members of the 18-49 demo. In 2010, deliveries had shrunk to 3.41 million viewers and 1.13 million adults 18-49.
Working from a much smaller base, Ferguson enjoyed his highest-rated season in 2006, his second with CBS. That year, The Late Late Show averaged 1.9 million viewers; this year, Ferguson is drawing around 1.4 million.
Letterman began his NBC career in 1980, hosting a short-lived morning program. After the show was canceled in October 1980, he was given a second crack in a much different time slot, bowing the revolutionary Late Night With David Letterman in February 1982.
Over the course of its 11½ years, Late Night won five Emmy Awards and introduced the world to genre-mocking features like “Stupid Pet Tricks,” “Stupid Human Tricks” and “Hal Gurnee’s Network Time Killers.” Letterman’s NBC show also generated a stable of indelibly weird characters, including Larry “Bud” Melman , Chris Elliott’s “The Guy Under the Seats” and Gus, the gruff but lovable driver of the NBC Bookmobile.
In 1992, after Carson announced his retirement and NBC selected Jay Leno to take over The Tonight Show, a jilted Letterman offered to hand Johnny the keys to Late Night.
“I have a show—you could be on my show,” Letterman said during a May 1992 appearance on The Tonight Show. “You could be a guest host. Come to think of it, you can have the damn thing. Why not? Things ain’t that great.”
In response, Carson laughed and said, “You’re still pissed, huh?”
At the end of the show, Letterman made a heartfelt acknowledgment of Carson’s role in his development as a host. “Thank you for my career,” he said.
A year after being passed over for the Tonight Show throne, Letterman jumped to CBS and the Ed Sullivan Theater.
In serving out his new contract, Letterman will break Carson’s standing record of most time served behind a late-night desk (30 seasons).