Steve Kroft: (Voiceover introduction) In the world of comedy, the saying goes, satire is something that closes on Saturday night. But not this year, at least when it comes to poking fun at politics and the media. The endless election, the continuing Clinton scandals, and the travails of the new administration -- it provided lots of material for Letterman, Leno and "Saturday Night Live." But nobody has benefited more than Jon Stewart, whose satirical coverage of the 2000 election has just earned him a prestigious Peabody Award. Stewart's "Daily Show" on Comedy Central cable is not coincidentally in direct competition with the 11:00 news in most of the country, and its sharp, edgy humor is stealing an audience.

(Footage of "The Daily Show With Jon Stewart")

Kroft: (Voiceover) It is television news' evil demented twin, so full of itself it almost looks real. At a time when more and more news broadcasts are produced as entertainment, Jon Stewart anchors an entertainment show disguised as news. With a nod and a wink, Stewart and his team of reporters deconstruct the day's events and personalities and have a go at all of the conventions of television news itself, like sweeps week hype.

Jon: I think why this works is there's a real frustration out there with the aggregate, assaultive effect of television news. If you were to watch television news, you would think we are in not only a deep economic depression, but a rampant crime wave. And not only that, that your children are not safe from bacteria that may or may not be growing in your bathroom.

Kroft: You don't have to go too far to satirize it.

Jon: No.

Kroft: What do you think of George W. Bush? Do you think he's funny?

Jon: I think he might be funny privately. When I see him on television, he's acting. Is he a good actor? Not really. When he got through the inauguration speech, people were kvelling, "He read it so beautifully!" They literally said, "I thought at that inauguration he was presidential." He was being sworn in as president! What did you expect?

(Footage of Jon and Kroft in Jon's office)

Kroft: (Voiceover) Jon Stewart is smart, which is one of the first things you notice about him.

Jon: I would have tidied up but I . . .

Kroft: Hey, this is . . .

Kroft: (Voiceover) The second is that his bare-brick office looks like a senior dorm room on Sunday morning.

Jon: You guys want a gum ball? (Jon pulls a bag of gumballs out of his desk)

(Footage of Jon working)

Kroft: (Voiceover) But as the co-executive producer and managing editor, he oversees almost as many correspondents, producers and writers as many real news broadcasts.

Kroft: This is your cigarette substitute?

Jon: Yeah, pretty much.

(Footage of Kroft blowing bubbles)

Kroft: Do you have, like, a news desk here that reads the wires every minute and . . .

Jon: We're completely fake. We -- we go by if somebody's got CNN on in their office and they go, '"Guys, get in here. You're not going to believe this!"

Kroft: But you do watch CNN.

Jon: Oh, yeah. We -- we keep our TV probably tuned mostly to CNN. And, you know, if we want fair reporting, then Fox. You know, they report and we decide. I don't know if you knew that. We're really good that way.

Kroft: You check facts.

Jon: We would never think to do that, to check actual facts. That's just not something that we -- that would ever occur to us.

Kroft: But it doesn't matter.

Jon: Exactly. We have no credibility issue because we have absolutely no credibility.

Kroft: (Voiceover) So it's no problem to cover the Clinton pardon investigation by standing in a far corner of the studio with a picture of the Capitol electronically imposed behind them.

(Excerpt from "The Daily Show With Jon Stewart"; footage of "The Daily Show With Jon Stewart" with Mo Rocca)

Kroft: (Voiceover) It was last summer when they were dispatched to the political conventions that Stewart and his crew moved from cult pleasure to cable hit. "The Daily Show" and the political convention seemed to be made for each other.

Jon: We're a fake news organization covering a fake news event. Did you go to the conventions?

Kroft: No.

Jon: Rightfully so. Because it's their promotional ad for the party. We -- we, as a fake news organization, should have been the only ones there, but there were, like, 15,000 of you guys just walking around. "Oh, do you believe these guys? It's a whole big song and dance." Well, then leave! We think it's goofy! We're staying!

Kroft: (Voiceover) By the end of the second convention, not only did everyone know who they were, they were playing along.

(Excerpt from "The Daily Show With Jon Stewart" with Jon and Peter Jennings)

Jon: William Bennett asked me for my autograph for his kid. You've seen the show. If you were William Bennett, would you even talk to me?

(Footage of "The Daily Show With Jon Stewart with Joe Lieberman; Stewart's correspondents; nice shot of Carell kissing Nancy on the cheek backstage)

Kroft: (Voiceover) Stewart's correspondents are all experienced comedy veterans. Vance DeGeneres wrote TV sitcoms; Stephen Colbert started with "Second City TV"; Mo Rocca once wrote news for a PBS children's show; and Steven Carell and Nancy Walls, who are married to each other, have both worked on "Saturday Night Live."

Kroft: The correspondents on the show are -- are very good.

Jon: Unbelievable. I mean, the one thing that I realized early on is if this show's funny through and through, I win. Whether I have anything to do with it or not, I'll win.

(Footage of Stewart; Smithberg; writers)

Kroft: (Voiceover) At "The Daily Show," Stewart polishes jokes with his boss, Madeleine Smithberg, who created the show and with a staff of writers and he is in and out of editing rooms.

(Footage of "The Daily Show With Jon Stewart")

Kroft: (Voiceover) He screens every piece, critiquing and doctoring the script.

Kroft: We were in the editing room and we were watching one of your reporters walk down the street and there was something really wonderful about the way -- about his walk, about his smirk, about the furrowed brow.

(Footage of Vance DeGeneres doing a story)

Jon: They go to the same school you guys have gone to. It's that sort of -- that manufactured emotion that comes from having to go from a tragic ocean disaster where 90 people are lost to, '"And we'll meet a dog and you won't believe how much he loves ice cream!"

(Footage of Stewart; wardrobe crew; William & Mary Soccer emblem on shirt worn by Stewart)

Kroft: (Voiceover) Jon Stewart was born Jonathan Stewart Leibowitz 38 years ago and raised near Trenton, New Jersey, before going off to William & Mary. He started out studying chemistry, but after two years, switched to psychology.

Jon: Apparently there's a right and wrong answer in chemistry; whereas in psychology, you can say whatever you want as long as you write five pages. (Footage of Jon; New York City; photo of Jon)

Kroft: (Voiceover) He took that psychology degree and became a bartender, then chucked it all to set out for New York City hoping to make it on the comedy club circuit. Instead, he found himself waiting tables while waiting for a break.

Kroft: Why did you change your name?

Jon: Leibowitz sounded too Hollywood. (Jon smiles)

Kroft: Did you think of quitting, think about do -- doing it again?

Jon: Quitting? I wasn't even in it. I don't think you can quit something before you're in it.

Kroft: Stopping. I mean, that -- did you -- did you say, 'I'm never going to do this again?'

Jon: I thought of stopping every day for four years, the first four years.

Kroft: What was your big break?

Jon: I don't know that there -- I mean, I don't know that there is such a thing.

Kroft: Are you still working in a restaurant? I mean, you got a break.

Jon: It's funny -- it's funny you mention that. It's Bennigan's. The big break for me was deciding this was my life, was deciding that no matter what, hell or high water, no turning back. I'm going to do this and get as good at it as I can get.

(Footage of "The Daily Show With Jon Stewart")

Kroft: (Voiceover) And what Stewart's best at is a brand of political satire that's made him a household name to Americans under 30, many of whom, believe it or not, get most of their news from late-night comedians; a fact politicians have been quick to recognize.

(Excerpt from "The Daily Show With Jon Stewart"; footage of McCain, Carell on Straight Talk Express)

Kroft: (Voiceover) During the New Hampshire primary, Senator John McCain let correspondent Steve Carell ride aboard the Straight Talk Express.

Jon: So Carell goes on McCain Express and he's giving him you know, "Favorite movie. Favorite dish. Favorite color."

(Excerpt from "The Daily Show With Jon Stewart" in which Carell asks McCain about his large number of misappropriations; McCain looks stunned; Carell cracks up and says, "Just kidding. I don't even know what that means!")

Kroft: You have all sorts of journalists that come on your program. You have all sorts of politicians who come on your program.

Jon: Right. Right.

Kroft: And they watch it. They know what it is. What do you make of it? I mean, it's almost like an acknowledgement that -- that their world is filled with . . .

Jon: Sure. Who loves -- who loves more than to come on and go, "You're right, kid. We're full of hot air," wink, you know, and then go back to running the world?

Kroft: Why do you think so much has been made of political humor this year? I know you've been on "Larry King." You've been on the "Today Show." You've been all these places . . .

Jon: Because there are five 24-hour news channels. At some point, they got to turn and go, "Does anybody have a joke about this?!"

Kroft: (Voiceover) Their Election Night coverage, which they labeled Indecision 2000 months before anyone had ever heard of a pregnant chad, nearly tied Fox News in the race for 18- to 30-year-old viewers. And all this popularity has made him a sought-after speaker on college campuses. At Northwestern, the Hillel Society paid him five figures for his take on Jewish culture.

(Excerpt of Jon's speech at Northwestern; footage of "The Daily Show With Jon Stewart")

Kroft: (Voiceover) Stewart seems to save his sharpest barbs for the news business itself, which he believes is becoming more and more a promotional tool for its corporate owners. And he took due notice when ABC's owner Disney invested in an Internet company and then its sock puppet spokesman serenaded Diane Sawyer on "Good Morning America."

(Excerpt from "The Daily Show With Jon Stewart" in which Jon looks disgustedly at the camera after the Sawyer clip. Jon makes a comment about Sawyer shedding a tear, not over the song, but over the shattered remains of her legitimate journalism career.)

Jon: It's about the system, then -- it's not about the people who populate it. Does that make sense?

Kroft: Mm-hmm. But what is it about the system?

Jon: Is that like any system? It -- it cannot be effective once it gets away from what its goal and heart should be, which is to present you with information, to inform you and to help you. Once you become us, once you became a competitive industry in the same respects as entertainment, now you're -- you're borrowing from, you know, the way we used to sell the "Sonny and Cher" show in the '70s. You know, how can that not be a farce when you're talking about news?

Kroft: Hmm.

Jon: Am I going to be -- am I part of your -- the CBS family . . . you know? Can I be fired for this?

Kroft: Are you part of the CBS News family?

Jon: I don't know.

(Footage of Stewart; Kroft)

Krofts: (Voiceover) Actually, in the course of doing this story, we found out he almost is. Comedy Central is owned by a company called Comedy Partners, which is a joint venture between AOL Time Warner and Viacom; the same company that owns CBS.

Jon: But it's in one joint venture. See? We're all going to get fired by the same guy one day and it's going to be like a freaky -- it's like a crossbreed genetic between, like, Dolly, the sheep and one of Murdoch's kids and it'll just rule AOL Time Viacom Warner synergy.

(Footage of Jon; "The Daily Show With Jon Stewart" Indecision 2004.)

Kroft: (Voiceover) With the elections over and a new president in office, where is the next big story? The same place as the last one, New Hampshire, where they're already projecting the 2004 voting trends. After all, the next primary and punch line is only three and a half years away.

(Excerpt from "The Daily Show With Jon Stewart")