Conan's exit: 'It is the right business move'

By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- The high-profile squabble that captivated late-night television for weeks comes to a close Friday, when Conan O'Brien makes his final appearance as host of "The Tonight Show."

O'Brien walks away from "Tonight" after just seven months with a severance package said to be worth $45 million, including $12 million for his staff, according to people familiar with the terms.

The payout is roughly equivalent to what NBC would have paid O'Brien for the remaining two years on his contract. Industry analysts say cutting ties with O'Brien was the best option for the struggling network.

"Even though it was hurtful for the business and individuals, it is the right business move," said Steve Farella, chief executive of media and marketing firm TargetCast tcm.

NBC, currently the lowest rated network, has suffered financially amid dwindling ad sales and stiff competition from cable networks. General Electric (GE, Fortune 500), the network's parent, said Friday that NBC's profit tumbled 30% in its latest quarter compared to last year.

O'Brien's departure stems from a dispute over scheduling changes NBC sought to implement after it abruptly decided to cancel "The Jay Leno Show."

NBC launched "Leno" in an effort to save money on prime-time costs by airing content that was cheaper to produce during peak viewing hours.

"NBC did a Hail Mary in prime time," said Bill Caroll, director of programming at Katz Television Group. "They believed that they could change the economics of prime time."

But the show received lackluster ratings during its three month run, and NBC came under intense pressure from local affiliates to replace "Leno" with more popular programming.

"The volume of objections from affiliates drove them to take this step," said Steven Winoker, an analyst who covers NBC's parent GE for Sanford Bernstein. "The best thing they can do now is put this behind them and move on."

Still, some industry analysts say the "Leno" experiment could have been a success if it had been given more time.

"It may have been a plan that was too far ahead of its time," said Brad Adgate, an analyst at branding firm Horizon Media. "NBC wanted to take a step forward and wound up taking a step back."

NBC is expected to fill the 10 p.m. ET slot vacated by "Leno" by programming perennial favorites such as the "Law and Order" franchise and the newsmagazine "Dateline." The network is also launching a new show starring Jerry Seinfeld called "The Marriage Ref."

"Clearly, they're hoping to lead from strength in the 10 o'clock time period," Caroll said.

Looking ahead, Katz said Leno should do "reasonably well" when he returns to "Tonight" in March: "He has a core audience and more than a decade of success." To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,960.57 -123.23 -0.72%
Nasdaq 4,449.56 -22.54 -0.50%
S&P 500 1,978.34 -9.64 -0.48%
Treasuries 2.47 -0.04 -1.59%
Data as of 4:19am ET
Company Price Change % Change
Facebook Inc 75.19 0.21 0.28%
Bank of America Corp... 15.59 -0.03 -0.19%
Ford Motor Co 17.62 -0.22 -1.23%
Applied Materials In... 21.23 -0.52 -2.41%
Intel Corp 34.25 0.00 0.00%
Data as of Jul 25

Sections

The food processing company accused of mishandling meat at its Shanghai, China plant says it will suspend sales and recall all food processed there. More

Is the economy back on track after a weak first quarter or about to get blown away? Investors will find out when the curtain is drawn on jobs and GDP data. There's also a Federal Reserve meeting. More

Louisiana is now the top location for motion picture filming, supporting thousands of new jobs and small businesses. More

Americans with disabilities face huge financial hurdles and it starts early on, according to a recent report. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.