A few years back, der Brucer and I attended a showing of the kinescope of the original Rodgers and Hammerstein Cinderella, starring Julie Andrews. In a discussion before the presentation, it was noted how small the studio space was, and how every inch of the studio had to be used to cram together what looked on the tube as a very spectacular show. The house where Cinderella lived with her stepmother and stepsisters was barely larger than her own little corner. The ballroom had enough space for Cinderella and her prince to turn around in, not much more, everyone else being on stair units (the better to give the illusion of space). It was all done with careful planning and mirrors.
This version of Cinderella was produced in NYC.
If anything, it's the lack of studio space in NYC that has driven television production out of that city. Filming a play, be it musical or not, requires space for sets, cameras, lights, control rooms, and we haven't even brought in a live audience yet. Compare this to the Los Angeles area, where land was still cheap (and horizontal) when the television studios were being built. CBS's Television City sits on acres of land, as do the NBC studios. Go on a tour of either, and I advise wearing good walking shoes, because you're going to need them. Even a three-camera sit-com (with audience) generally uses a stage space that is wider than most live theaters.
Partly for this reason, much of what used to be filmed in NYC has moved west. The opportunites for someone appearing on Broadway to appear on a talk-show have been sliced to ribbons. And, other than Saturday Night Live, I can't think of any entertainment production currently going on in NYC. Maybe a soap or two, but that's mostly west coast these days.
So too has the attention of the audience moved away from NYC. Take Chenoweth, for example. She's on the verge of becoming nationally known and recognized. But she can't do that in NYC alone, not any more. This means appearing in concerts, or on television, places where people nationwide can see her. No wonder she's leaving Wicked when her contract runs out. Life on the Wicked stage can only hold her back.