Leno typically attracted about five million nightly viewers between 1999 and 2009. The Late Show lost nearly half its audience during its competition with Leno, attracting 7.1 million viewers nightly in its 1993–94 season and about 3.8 million per night as of Leno's departure in 2009. In the final months of his first stint as host of The Tonight Show, Leno beat Letterman in the ratings by a 1.3 million viewer margin (5.2 million to 3.9 million), and Nightline and the Late Show were virtually tied. Once O'Brien took over Tonight, however, Letterman closed the gap in the ratings. O'Brien initially drove the median age of Tonight Show viewers from 55 to 45, with most older viewers opting to watch the Late Show instead. Following Leno's return to The Tonight Show, however, Leno regained his lead.
According to a 2007 article in Forbes magazine, Letterman earned US$40 million a year. A 2009 article in The New York Times, however, said his salary was estimated at US$32 million per year. In June 2009, Letterman's Worldwide Pants and CBS reached an agreement to continue the Late Show until at least August 2012. The previous contract had been set to expire in 2010, and the two-year extension is shorter than the typical three-year contract period negotiated in the past. Worldwide Pants agreed to lower its fee for the show, though it had remained a "solid moneymaker for CBS" under the previous contract.
Letterman and Lasko wed on March 19, 2009, during a quiet courthouse civil ceremony in Choteau, Montana, where he had purchased a ranch in 1999. Letterman announced the marriage during the taping of his show of March 23, shortly after congratulating Bruce Willis for his marriage the week before. Letterman told the audience he nearly missed the ceremony because his truck became stuck in mud two miles from their house. The family resides in North Salem, New York, on a 108 acres (44 hectares) estate.
On October 1, 2009, Letterman announced on his show that he had been the victim of a blackmail attempt by a person threatening to reveal his sexual relationships with several of his female employees – a fact Letterman immediately thereafter confirmed to be true. He stated that someone had left a package in his car with material he said he would write into a screenplay and a book if Letterman did not pay him US$2 million. Letterman said that he contacted the Manhattan District Attorney's office and partook in a sting operation that involved the handover of a fake check to his extortionist.
Subsequently, Joe Halderman, a producer of the CBS news magazine television series 48 Hours, was arrested around noon (EST) on October 1, 2009 after trying to deposit the check. He was indicted by a Manhattan grand jury following testimony from Letterman and pleaded not guilty to a charge of attempted grand larceny on October 2, 2009. Halderman pleaded guilty in March 2010 and was sentenced to six months in prison, followed by probation and community service.
On October 3, 2009, a former CBS employee, Holly Hester, announced that she and Letterman had engaged in a year-long secret affair in the early 1990s while she was his intern and a student at New York University. On October 5, 2009, Letterman devoted a segment of his show to a public apology to his wife and staff. Three days later, Worldwide Pants announced that Birkitt had been placed on a "paid leave of absence" from the Late Show. On October 15, CBS News announced that the company's chief investigative correspondent, Armen Keteyian, had been assigned to conduct an "in-depth investigation" into Letterman.