NEW YORK - CBS said on Thursday that Stephen Colbert will become the host of "The Late Show" when David Letterman retires next year. Colbert, who hosts "The Colbert Report" on the cable channel Comedy Central, signed a five-year agreement with the network, CBS' CEO Les Moonves said in a statement.
The location of the show will be determined at a later date, the network said.
Letterman's surprise retirement announcement gives CBS a much-needed chance to lure younger viewers to his late-night television time slot, matching the recent elevation of Jimmy Fallon that reenergized rival NBC's "Tonight Show" franchise, according to media executives.
Since the 39-year old Fallon succeeded Jay Leno as star of "The Tonight Show," NBC's ratings for the 11:35 p.m. hour have jumped both in overall audience numbers and among the key demographic of viewers aged 18 to 49 that advertisers most desire.
The surge comes as a larger number of young viewers are tuning in to Fallon, a veteran of "Saturday Night Live," as he masquerades in elaborate skits as rock stars and politicians, or plays Egg Russian Roulette with celebrity guests willing to risk having raw eggs smashed over their heads on national television.
In the most recent Nielsen ratings, "The Tonight Show Starring Jimmy Fallon" averaged 5.2 million viewers, up 41 percent from Leno's numbers before his February departure from NBC.
Ratings for both Letterman and "Jimmy Kimmel Live!" on the Walt Disney Co.-owned ABC network trail with slightly less than 3 million viewers apiece.
Letterman's announcement during the taping of "Late Show with David Letterman" in New York that he plans to retire sometime in 2015, when his contract expires, represents the latest upheaval in a changing of the U.S. television's late-night guard.
The three shows together generated more than $400 million in advertising sales in 2012, according to the latest numbers available from ad tracking firm Kantar Media.
And the three shows all remain large, though shrinking, profit centers because the networks cram in more commercials per hour late at night than they do in prime time, said Brad Adgate, research director at media and advertising firm Horizon Media. Production costs are held down, with guests being paid at union scale rates, he said.
CBS has not said who might succeed Letterman, but the network needs to find someone who can siphon away some of Fallon's younger viewers, media executives said.
Fallon has also developed a huge social network following, an increasingly important marketing avenue for networks to promote their shows.
YouTube registered more than 4 million views of Fallon's parody of Bruce Springsteen's hit song "Born to Run," in which he and Springsteen lampooned New Jersey Governor Chris Christie's bridge-closing scandal.