“Do you feel like a little story?” David Letterman asked the studio audience last night. He was sitting at his desk. He’d already done his monologue, which included a joking aside about “takin’ a ride on the Appalachian trail.”

And then for ten minutes, he told the story that had broken only a couple of hours before: that he’d been the object of an extortion attempt, and that “I have had sex with women who work on the show.” But before he said that he put it in the context of an odd, often humorously phrased anecdote, almost a folksy shaggy-dog story.

He told us about the “little package in the back of my car” that he found, which contained a threat from a man who wrote that he knew “some terrible, terrible things” about Letterman. The audience laughed heartily. He said “the guy said [he was] going to write a screenplay about me,” and that Dave’s first thought was, “that’s a little hinky” — “hinky” being a favorite bit of Letterman-language for odd things. The demand was for two million dollars.

He said it was a “terrifying moment,” “quite scary,” and that “I felt menaced.” He said he decided to take the threat to the authorities and “I had to tell them all the creepy things I had done.” Again, he got laughs from this.

“Now of course we get to, what was all the creepy stuff?… The creepy stuff was, I have had sex with women who work on the show.” There was silence mingled with gasps — for the first time, no laughs then. “My answer to that was, yes, I have.” He got applause and laughter from this, but it seemed a bit more nervous. “Would [this news] prove embarrassing?” he asked rhetorically. “Yes it would — especially for the women.” And the audience laughed quite loudly.

Here’s the thing about that reaction: If you’ve ever been in a studio audience before, you know you’re almost hypnotized into giddy good humor. You’ve been standing on a line for hours, you’ve had a warm-up guy come out and joke and tell you what to expect (Letterman usually comes out and does his own warm-up bit, to the best of my knowledge). And we no longer live in a culture where, upon hearing something disturbing, people feel comfortable saying (not shouting), “For shame!” or quietly walking out. In any case, I’m sure everyone was just pretty stunned, and that some of the laughter was of the nervous sort.

In a sense, Letterman had a captive audience with which to frame his admission. But that said, this was an extraordinary piece of television. He took what could be a damaging scandal, a tale of blackmail and workplace relationships, and turned it into a story that was at least in part about what he termed his “towering, Midwestern mass of guilt.”

Letterman even managed to get in a few more mild jokes about it. “I know what you’re sayin’: ‘Oh, Dave had sex!'” — a reference to his age (62). And though he said he would not have more to say about it, when he came back from a commercial, he said he’d taken questions from the audience during the break and “a guy said, ‘I’d like to see that movie.'” More laughs. On with the show.

This is going to play out in ways that you or I or Letterman cannot predict. There are going to be a lot of talks about consensual versus coerced sexual relationships, about Letterman’s history of making jokes about straying politicians. We’ll hear debates and conjectures about his long-term relationship and marriage since March to Regina Lasko, the mother of his son, Harry. Letterman will be mocked and he’ll be defended.

As it stands right now, though, what Letterman did last night was a striking, unique, and — for all the laughter it provoked — dramatic example of how a celebrity deals with both a threat and a scandal.

I’m sure you have your own opinions on how Letterman handled it, below.

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