NBC, Conan O'Brien Reach Deal for 'Tonight Show' Exit

NBC and Conan O'Brien have reached a deal that will see O'Brien step down as host of The Tonight Show after only seven months, clearing the way for Jay Leno to retake the late-night franchise. His final show will be Friday, Jan. 22.

"NBC and Conan O'Brien have reached a resolution of the issues surrounding O'Brien's contract to host The Tonight Show with Conan O'Brien,"  the network said in a statement. "NBC and O'Brien will settle their contractual obligations and the network will release O'Brien from his contract, freeing him to pursue other opportunities after September 1, 2010."

News of the deal was first reported early Thursday, Jan. 21, by The Wrap.

"In the end, Conan was appreciative of the steps NBC made to take care of his staff and crew and decided to supplement the severance they were getting out of his own pocket," O'Brien's manager, Gavin Polone, told TheWrap. "Now he just wants to get back on the air as quickly as possible."

Terms have not been disclosed, but O'Brien reportedly will receive a $32 million payout. His staff will receive $12 million in severance--a sticking point that reportedly delayed the final agreement.

Reruns of The Tonight Show with Conan O'Brien will air at 11:35 p.m. from Jan. 25-29. The remaining pre-Olympic late-night schedule has yet to be confirmed. Leno's final primetime program will be Feb. 11, the eve of the opening ceremonies of the Vancouver Winter Olympics. He'll resume his perch at The Tonight Show March 1, after the conclusion of the Olympics and when NBC will roll out a post-Olympics schedule that features scripted drama, reality and another edition of Dateline.

"We're pleased that Jay is returning to host the franchise that he helmed brilliantly and successfully for many years," Jeff Gaspin, chairman of NBC Universal Television Entertainment, said in a statement. "He is an enormous talent, a consummate professional and one of the hardest-working performers on television."

The announcements follow more than a week of furious punches and counterpunches that ramped up when O'Brien released a sharply worded statement Jan. 12 refusing to go along with NBC's gambit to push The Tonight Show to 12:05 a.m. in order to make room for a half-hour of Jay Leno at 11:35 p.m.

O'Brien said that he believed moving The Tonight Show to 12:05 a.m. would "seriously damage what I consider to be the greatest franchise in the history of broadcasting." He also faulted NBC and Leno for undercutting him with an anemic lead-in. Supporters mobilized on social media organizing "I'm with Coco" rallies in major cities including New York and Los Angeles. And the media onslaught continued unabated with late-night hosts including David Letterman and Jimmy Kimmel making much hay over the network's missteps and laying the blame at the feet of Leno and more pointedly NBC Universal CEO Jeff Zucker.

Last weekend, NBC began to mount a counterattack, making various NBC executives available to the New York Times. NBC Universal Sports and Olympics chairman Dick Ebersol told the Times that O'Brien's Tonight Show had been an "astounding failure." O'Brien countered in his monologue, saying "In fact, they think I'm such a failure they now want me to run the network."

Zucker also broke his silence, first in the Times and then on Charlie Rose, where he told a shocked Rose that he received "death threats" for the proposal to move O'Brien to midnight. And Leno matter-of-factly addressed the controversy on his program Jan. 18, saying he harbored no ill-will toward O'Brien.

"Through all of this, Conan O'Brien has been a gentleman," he said. "He's a good guy. I have no animosity towards him. This is all business. If you don't get the ratings, they take you off the air. I think you know this town, you can do almost anything. You get ratings, they keep you."

But where exactly O'Brien may end up remains unclear. ABC Entertainment chief Steve McPherson has repeatedly stated that he is happy with the network's late-night lineup of Nightline and Jimmy Kimmel Live.

Fox executives are interested in building a late-night franchise around O'Brien, who they believe would fit nicely with their younger, edgier brand. But the network's affiliates, who have been battered by the downturn in advertising revenue, aren't as keen. Affiliates get to keep more of the ad inventory with syndicated fare in late-night than they would with a national program there.

Fox executives have asked the Fox-owned stations to run the numbers, and stations have responded that they expect they would lose millions if the local outlets had to give a late-night hour back to the network. And Fox has had little success building a late-night franchise in the past. One Fox affiliate insider warned that Chevy Chase also seemed to be a good fit for Fox in late night: a household name that matched up well with the Fox demographic. Chase's Fox show of course flamed out quickly in the early 90s. "They thought there might be some flow there, but it just didn't happen. It's like drilling for oil, you just don't know what you're going to get."

Interestingly, Leno found himself in a situation similar to O'Brien's when in 1992 NBC was trying to keep Letterman, then the host of NBC's Late Night, from bolting to CBS. NBC was considering shunting Leno, who had taken the helm of The Tonight Show in May 1992, to a later hour and giving Tonight to Letterman. Leno had been hosting The Tonight Show for about six months. In an interview with the New York Times, he expressed "surprise" and "disappointment" that NBC was dissatisfied with the ratings performance of the show and said that he would leave the network before he agreed to host a show at 12:35 a.m.

"NBC is like a guy with two girlfriends who doesn't know which one he's going to marry," said Leno. "And the longer you wait, the madder they both get."