Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

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

Index Last Change % Change
Dow 18,261.45 -131.01 -0.71%
Nasdaq 5,305.75 -33.78 -0.63%
S&P 500 2,164.69 -12.49 -0.57%
Treasuries 1.61 -0.02 -1.04%
Data as of 5:06pm ET
Company Price Change % Change
Apple Inc 112.71 -1.91 -1.67%
Bank of America Corp... 15.52 -0.08 -0.51%
Procter & Gamble Co 87.76 -1.23 -1.38%
Yahoo! Inc 42.80 -1.35 -3.06%
Chesapeake Energy Co... 6.63 -0.24 -3.49%
Data as of Sep 23
Sponsors

Sections

Wells Fargo is under increasing pressure to punish the executives who oversaw the bank during a massive fraud that involved creating more than 2 million unauthorized accounts. More

Donald Trump renewed his threats to cut two EPA regulations. He's also said he would be 'dismantling' Dodd-Frank while supporting one hiring regulation. More

Twitter and Square CEO Jack Dorsey is putting a link to voter registration on everyone's digital Square receipts. More

The Department of Education revoked its recognition of the accreditor ACICS, the agency that gave the now defunct ITT Tech and Corinthian for-profit schools stamps of approval. About 245 other schools are at risk of losing accreditation. More