Conan O’Brien, after deal with NBC, is free to join another network

LOS ANGELES — Conan O’Brien, who hosts his last episode of “The Tonight Show” Friday night, does not intend, in his words, to become a $200 question on “Jeopardy.”

“He just wants to get back on the air as quickly as possible,” said Gavin Polone, his manager.

A rich severance deal struck Thursday between O’Brien and NBC frees the comedian to join another network as early as Sept. 1. Most observers expect him to first flirt with Fox, which has wooed him in the past.

Wherever O’Brien pops up, however, he will be
without his trademark comedy bits, such as Triumph the cigar-chomping
dog puppet and the Masturbating Bear, which remain the intellectual
property of NBC. He’s also muzzled from disparaging his former employer, although network executives expect the occasional lampoon.

A Fox show is far from certain. The News Corp.
network might face a hard sell with affiliates. Cable networks,
including FX and Comedy Central, might also jump at the chance to land
the late-night star.

O’Brien’s settlement, signed in the early Thursday
morning hours, brings an abrupt end to the comedian’s nearly 20-year
career with NBC, and his seven months as host of “The Tonight Show.” NBC will pay O’Brien nearly $33 million, a sum that will go down as one of the most eye-popping in the annals of Hollywood.

NBC also will spend $12 million in
compensation for the show’s 190 staffers, according to people familiar
with the situation. Nearly 70 people followed O’Brien to Los Angeles from New York last year when his show switched coasts. In the end, it will cost the network $45 million to close the book on its late night drama.

Now the heat is on Jay Leno, who after a brief five months in prime-time will reclaim his old “Tonight Show” hosting duties and 11:35 p.m. slot on March 1 to again go against his longtime nemesis, CBS’ David Letterman. NBC’s
late-night upheaval thrust the genial Leno into the villain’s role and
a punching bag for other comedians. Letterman, on the air, joked that NBC had a new drama: “Law & Order: Leno Victims Unit,” and performed snarky mimics of Leno’s high-pitched voice.

Leno shot back: “You know the best way to get Letterman to ignore you? Marry him.”

NBC executives now must mop up. Jeff Gaspin,
NBC Universal’s chairman of television entertainment, said in an
interview that the network would come up with a “clever but subtle”
promotional campaign that would wink at the costly flip-flop while
promoting Leno’s return to “The Tonight Show.” Moving Leno back to his
old perch, Gaspin said, was “a pure business decision.”

But a business that is less lucrative than it used to be. “The Tonight Show” had been a stalwart cash cow, earning $50 million
in profits as recently as two years ago. After incurring considerable
costs in building a new studio, relocating employees and losing
audience, the show is on track to lose $20 million for the year, said knowledgeable people.

Ironically, it was NBC’s desire to keep
O’Brien at the network that led to the fiasco that pitted its two
comedians against each other and galvanized viewers to pick sides.

Nearly six years ago, Jeff Zucker,
who was then angling to become the next CEO of the company, hit upon a
strategy to guarantee O’Brien, who had spent more than a decade as star
of “Late Night with Conan O’Brien,” the coveted job
of hosting “The Tonight Show.” Zucker gambled that by 2009, Leno, who
then would be approaching 60, would be ready to exit the stage.

But Leno wasn’t ready to retire, so Zucker came up with a quick fix to keep both comedians: give Leno a 10 p.m. show, which would also plug holes in NBC’s prime-time schedule.

The ploy backfired. NBC miscalculated how much damage Leno’s new show would cause to local stations’ late newscasts.

Within a month of the show’s prime-time launch in
September, stations began complaining about poor ratings. Some reported
audiences for their late local news plunging as much as 40 percent,
just as stations were already reeling from a steep drop in advertising.
NBC urged them to be patient, counseling there would be an
uptick when competing networks aired reruns. The lift never came, and
stations threatened the nuclear option: pre-emptions.

“We knew we had a problem at 10 p.m.
and we had to deal with it,” Gaspin said. “The concerns got even louder
in November and by December they had reached a crescendo.”

Although the stations were focused on Leno’s performance, NBC had another crisis: O’Brien’s “Tonight Show” wasn’t mustering the ratings it had expected.

Gaspin’s solution: move Leno back to 11:35 p.m and slide O’Brien’s show a half-hour to 12:05 a.m. O’Brien’s show, he figured, could benefit from the lead-in of Leno’s broader audience. Despite the shuffling, “we still wanted Conan O’Brien to stay at the network,” Gaspin said.

The first week of the new year, Gaspin explained his plan to Leno, who agreed to return to 11:35 p.m. even if it meant having only a half-hour show. The fix, however, would be costly for NBC because it meant cramming three big-budget shows, including “Late Night with Jimmy Fallon,” into 2 1/2 hours.

“We tried to come up with a scenario that would work,” Gaspin said.

O’Brien, however, refused to sign on. “They
underestimated him,” said a person close to O’Brien, who asked not to
be identified because he wasn’t authorized to speak for the record.

The comedian took his protests public, saying he
wouldn’t participate in a scheme that he felt would damage “Tonight
Show.” The next week was filled with on-air barbs hurled at his network
bosses, with each night’s jokes growing more caustic and bitter.

Now Leno, whose prime-time show ends Feb. 11, must improve on O’Brien’s performance. And NBC must win back audiences at 10 p.m., where it lost valuable ground.

“It will be easier to repair the damage at 11:35 p.m. than it will be at 10,” said Jason Maltby,
a top advertising buyer for the firm Mindshare. Simply moving Leno back
to late night “won’t help the affiliates in the short term,” he said.

The late night drama comes at an awkward time for parent General Electric Co. GE conceded that it would lose about $200 million on its coverage of the Winter Olympics in Vancouver and it is in the process of selling NBC Universal to cable giant Comcast Corp.

But NBC’s Gaspin said he didn’t regret the network’s decisions.

“Up until the very last second,” he said, the
network was willing to squeeze both O’Brien and Leno in late night.
Gaspin also sought to tamp down criticism of NBC and his boss, Zucker.

“You have to be willing to take risks in this
business,” Gaspin said. “You can’t be afraid of the public scorn or to
be put in the stockade if your decisions don’t work. You always have to
be willing to take a chance.”

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