NBC and Conan O’Brien finalize settlement

LOS ANGELES — Ending his brief reign as host of one of television’s longest-running shows, Conan O’Brien on Thursday finalized a rich severance deal with NBC that releases the comedian from “The Tonight Show” and frees him to join another network in time for the new fall season, an NBC spokeswoman confirmed.

The settlement, hammered out over the last week, brings to an abrupt end O’Brien’s nearly 20-year career with NBC, where he began as a staff writer for “Saturday Night Live” in the late 1980s. His separation from NBC includes a payout that will go down as one of the most eye-popping in the annals of Hollywood: O’Brien, who has 2 1/2 years remaining on his contract, will walk away with about $32 million,
according to people close to the negotiations who spoke on condition of
anonymity because they were not authorized to discuss the matter
publicly.

Overall, NBC will have to shell out $40 million to $50 million to close the book on its late-night drama.

NBC agreed to compensate the show’s staff members, including executive producer Jeff Ross. About 190 people worked on the show, including nearly 70 people who relocated to Los Angeles from New York early last year to work with O’Brien at the program’s newly built studios on the Universal lot. NBC and O’Brien’s team spent the last few days ironing out severance packages for all the show’s workers.

O’Brien’s manager, Gavin Polone, said the talk show host would kick in some of his own money for his staff as well.

O’Brien’s final “Tonight Show” appearance will be
Friday. But he may not be off the air for long. The comedian will be
allowed to work on a competing network by September. Jay Leno will be back in his old time slot even sooner. Leno, who surrendered
“The Tonight Show” to O’Brien last spring and then was handed his own
prime-time show on the network at 10 p.m., will return to late night after NBC’s Olympic coverage concludes at the end of February.

The costly resolution ends two weeks of high drama that damaged the images and reputations not only of NBC executives, but also of Leno, who was painted as the villain by many in the media, including CBS’ David Letterman,
who took numerous jabs at Leno over the last week. He was also the
target of a grass-roots Internet campaign to demonstrate support for
the embattled O’Brien. Earlier this week, Leno provided his side of the
story on his program, saying he told NBC executives that he was skeptical that a prime-time show would work.

It was an undignified end to O’Brien’s long career at NBC
— he spent 16 years as host of “Late Night With Conan O’Brien” — and
his short tenure at “The Tonight Show.” Certainly this was not how NBC
anticipated O’Brien’s run with “The Tonight Show” playing out when it
declared him the “king of late night” in June after he made his debut
as host.

Ironically, NBC looked to avoid this
exact scenario when it decided in 2004 to make O’Brien host of “The
Tonight Show” in 2009. That move, engineered by the company’s chief
executive, Jeff Zucker, was done to keep O’Brien from jumping to Fox. NBC
also was betting that by 2009 Leno would be ready to exit the stage and
that O’Brien, who appealed to younger viewers, would be ready to take
over. But as his retirement loomed, Leno became increasingly unhappy at
the prospect of stepping aside while still No. 1 in the ratings.

Moreover, with rival networks expressing interest in
hiring Leno, Zucker faced a difficult choice: Renege on his promise to
give O’Brien “The Tonight Show” — and pay him a $40-million breakup fee — or follow through with his plan and nudge Leno out the “Tonight Show” door.

Instead, Zucker crafted a quick fix: Give Leno a 10 p.m. show, which would keep both comedians in the NBC fold. O’Brien went along with Zucker’s “Leno in prime-time” plan when it was announced in 2008. He moved his family to Los Angeles to prepare to inherit the late-night institution previously hosted by Johnny Carson and, before him, Jack Paar. But Leno’s show at 10 p.m., which launched in September, drew weak ratings and critiques by TV critics that Leno seemed off his game.

The low viewership level hurt NBC’s affiliates, who count on a large audience at 10 p.m.
to boost their late local news programs, a big revenue generator. Many
local stations experienced ratings declines of more than 20 percent,
and NBC was facing a mutiny as many affiliates threatened to push Leno to 11 p.m. and run their local news at 10 p.m. NBC
executives decided they needed to make a switch and told O’Brien they
were pushing the start time of his show half an hour later, to 12:05 a.m., to make room for Leno at 11:35 p.m.

NBC expected that O’Brien would go along. But he refused,
triggering a firestorm of controversy and rich material for other
comedians.

Now O’Brien is free to decide his future. Most
industry observers are betting that Fox, which has struggled in the
past to get into the late-night game, is his next stop. Indeed, O’Brien
has a history with Fox, where he spent two years as a writer on “The
Simpsons” in the early 1990s. Just last week, Fox Entertainment President Kevin Reilly expressed enthusiasm for O’Brien — but the network may face a hard sell
with its affiliates, some of whom are locked into contracts to run
syndicated sitcom reruns in the 11 p.m. time period.

But if Fox really wants O’Brien, odds are it would
find a way to make it happen. The earliest he would be on the network
would be in the fall, but next January is more likely.

Meanwhile, Leno, whose prime-time show ends Feb. 11, will face the challenge of improving on O’Brien’s ratings. NBC has been trailing CBS’ David Letterman and is tied with him in the coveted demographic of adults ages 18 to
49. During the last week, O’Brien’s ratings have nearly doubled.
Whether the backlash against Leno, fair or not, will hurt him when he
returns to his old 11:35 p.m. time slot remains a question mark.

And finally, NBC, which is already enduring a tough season, now has to spend heavily to develop new shows for the 10 p.m. hour, at a time when the General Electric Co.-owned network already conceded that it would lose about $200 million on its coverage of the Winter Olympics in Vancouver.

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