I never watched Leno on late night, and I always wondered what the demographic was for his show. And I'm guessing NBC didn't look at that too closely either, or perhaps they might have figured out that he would tank at 10 p.m. 

I'm not sure it's hubris, however; more likely their own irrelevance. They were so quick to think cheap programming that they didn't stop to think about the impact of that decision.