Conan O'Brien

Conan O'Brien will receive $45 million for himself and his staff in an exit deal clearing the way for Jay Leno to return as host of The Tonight Show, NBC announced Thursday.

About one-fourth of the money ($11 million to $12 million) will be divided among O'Brien's 200-plus staffers as severance, under terms of the deal announced on NBC's Today. O'Brien's last show will be Friday, and Leno will return to Tonight, the show he hosted for 17 years, on March 1.

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O'Brien will be allowed to appear on another network as early as September, but likely without such old friends as Masturbating Bear. Characters and bits created for NBC will remain the property of the network, NBC said. The fate of Triumph the Insult Comic Dog, created and voiced by O'Brien's writer and longtime friend Robert Smigel, was unclear. 

NBC later released two statements: One, a terse announcement of O'Brien's departure, and the other a lengthy confirmation of Leno's return.

"We're pleased that Jay is returning to host the franchise that he helmed brilliantly and successfully for many years," said Jeff Gaspin, chairman of NBC Universal Television Entertainment. "He is an enormous talent, a consummate professional and one of the hardest-working performers on television."

After O'Brien's farewell Friday, NBC will re-run episodes of Tonight until the start of its Olympics coverage on Feb. 12. The network will air an episode of Dateline at 10 o'clock Friday in place of The Jay Leno Show on Friday.  

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After more than a week of backstage negotiations and onstage barbs at NBC from all corners of late night, and months of scrutiny over an expensive and ultimately failed handover of the coveted Tonight Show from Leno to O'Brien, NBC's late night schedule will end up looking like it has for nearly two decades. Leno will host Tonight at 11:35, followed by a younger host with Saturday Night Live connections at 12:35. Except now that host will be Jimmy Fallon, who took over Late Night from O'Brien earlier this year in anticipation of O'Brien's move to The Tonight Show.

Another change: NBC's failed experiment with putting Leno in prime time forced programmers to scramble to fill a third of their prime-time, weekday schedule. "At the end of the day Jay at 10 o'clock didn't work," NBC Universal Chief Executive Jeff Zucker told The New York Times, "and I take responsibility for that."

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Fox, meanwhile, has already expressed interest in O'Brien. His departure to that network, or another, could create a four-way ratings contest among him, Leno, David Letterman on CBS and Jimmy Kimmel on ABC.

O'Brien turned in lower Tonight Show ratings than Leno due to a mix of factors that will be endlessly debated by late-night fans. On the one hand, he and the local news shows that preceeded him had a weaker lead-in from Leno than Leno had from scripted dramas when he hosted Tonight.

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And while some Leno fans find O'Brien's humor too esoteric or just unfunny, some O'Brien fans were annoyed at what seemed like an attempt to tamp down his Late Night weirdness for the Tonight Show.

Last week, NBC executive Dick Ebersol struck back at O'Brien for criticizing Leno in his nightly monologues. Among O'Brien's jibes: telling the children of America they could do whatever they wanted, as long as Leno didn't want to do it too.

Ebersol said it was "chicken-hearted and gutless to blame a guy you couldn't beat in the ratings."

NBC exec calls Conan "chicken-hearted" and an "astounding failure"

In fact, O'Brien and Leno have never faced off head-to-head.

That may be about to change.

O'Brien's appearance on another network around the 11:30 time slot would create the most contentious late-night field in history. Letterman and Leno have had bad blood since Leno seized The Tonight Show in 1992, sending Letterman to start the Late Show on CBS. Letterman, O'Brien, and Kimmel have all taken shots at Leno this week for his role in O'Brien's ouster. A sullied image with fans — if Leno emerges with one — could hurt his Tonight Show ratings.

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Another question: How a ratings-revitalized Letterman might fare against Leno in their unplanned late-night rematch. A feud with Sarah Palin and Letterman's admission that he had sex with staffers have drawn more eyes to his show, and he's built on the attention to top late-night ratings in Leno's absence.

And finally: What will O'Brien do next?

Watch Wednesday night's full episode of The Tonight Show with Conan O'Brien: