Conan's $45 Million Dilemma

With Leno reportedly moving back to 11:35, NBC has humiliated Conan O’Brien. Will he get a $45 million payout for his troubles? Kim Masters reports on the latest latenight ripples.

01.08.10 4:50 PM ET

You could say Conan O’Brien is now The Biggest Loser on NBC. If you call it losing to get millions of dollars no matter what happens next.

Hollywood is still in awe as the drama at NBC continues to play out. What seems to be set is that Leno will go on the air at 11:35 p.m. after the Olympics. What’s not set is the fate of O’Brien, who is said to be enraged at NBC’s clumsy handling of the matter. His option appears to be to remain as the man in the chair on what would still be called The Tonight Show but would begin at 12:05 a.m.

What’s mesmerizing the entertainment industry is that O’Brien has a contract requiring NBC to pay him a staggering penalty, reportedly $45 million, if his circumstances as host of The Tonight Show change. It is unclear what would trigger that penalty and whether pushing the show out of its time slot would do the trick.

“If they put themselves in a position where they have to pay him if they move him, they’re the biggest idiots ever,” says an industry veteran.

“If they put themselves in a position where they have to pay him if they move him, they’re the biggest idiots ever,” says an industry veteran who, despite being well-connected to the key players, doesn’t know the exact details of what would activate that payout clause.

If O’Brien wants to stalk off, his options may be limited. The perception at this point is that he’s been damaged by his less-than-successful run at 11:35. “So many people like Conan at 12:30,” says this source. “But it’s not working at 11:35. There’s something that makes people antsy about Conan at that time.”

ABC is not believed to be pursuing O’Brien. Fox—seen as the more youth-oriented network—is still a question mark, although it seems likely that they would at least want to price out a deal. But a source with firsthand knowledge of Fox’s thinking seems to feel that O’Brien will probably stay at NBC after exacting a huge payment in exchange for his fealty. “However humiliated you might feel you are, however sleazy you might feel NBC is, wouldn’t that go a long way toward making you feel better?” this executive says. “It’s only moving the show by half an hour.”

Meanwhile, another executive says Leno is more than willing to do a 30-minute show. “Everybody’s so surprised,” he says. “But he gets to do his monologue and a guest. He doesn’t like the other stuff he has to do now. He doesn’t like the program.”

A top executive at a rival network puts it this way: “Good deal for Jay. Gets paid for an hour. Works a half-hour.”

Meanwhile, NBC is left with a gaping chasm at 10 p.m. It takes lots of time and money to rebuild a schedule, so, short-term, these might be good times for Dick Wolf, who has his handy Law & Order shows that could fill the gap. (The most obvious candidate to put back into a 10 p.m. slot is SVU, which had to move from its Tuesdays at 10 position to Wednesdays at 9 because of Leno. There’s also the so-called mothership, the original Law & Order, which could move back to its Friday at 10 hour.)

A prominent television writer-producer says he’s happy that NBC will return to scripted programming at 10 p.m. But he says the issues that drove the network to put Leno in that time slot haven’t gone away: Programming is still expensive and the audience is hard to get. “It’s been a disaster at 10 o’clock and it’s not just Leno,” he says. “This is about nothing working at 10 p.m.” He points out that ABC has failed to capitalize on the opportunity that opened when NBC—one of its two broadcast rivals—got out of the game at 10 p.m. And he says CBS hasn’t done much better.

But he reserves most of his scorn for NBC. The network “hasn’t had a real hit since 1994,” he says (though Will & Grace and West Wing certainly did well in their times). “Nothing that has gotten really big numbers in 15 years. Nothing like Fox with American Idol or CBS with the CSI franchise. That’s not because of changing viewership but because they haven’t put a damn thing on that people wanted to watch.”

Just look at Leno’s ratings last night, after a day of gigantic publicity about his show, he says. “It got a 1.4 last night,” this producer marvels. “Nobody gives a shit. Isn’t that crazy? A 1.4, after all that.”

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Kim Masters covers the entertainment business for The Daily Beast. She is also the host of The Business, public radio's weekly program about the business of show business. She is also the author of The Keys to the Kingdom: The Rise of Michael Eisner and the Fall of Everybody Else.