Leno may be returning to ‘The Tonight Show’

Jay Leno, the former king of late-night television who was pushed out as host of NBC’s “The Tonight Show” last year and then struggled in his new prime-time slot, is in talks to return to 11:30 p.m. Conan O’Brien, who succeeded Leno, would either go back to following Leno or leave the network.

The reshuffle could happen as soon as March, after NBC finishes airing the 2010 Winter Olympics, according to people familiar with the situation who spoke on condition of anonymity. Although Leno is on board with the plan, O’Brien has not yet signed on and that needs to be resolved before the network can make it official, sources said.

The network’s flip-flop is being driven in large part by complaints from NBC affiliates across the country who have lost viewers and advertising revenue because of Leno’s performance in the 10 p.m. slot. The imminent move also highlights the fourth-place network’s difficulty in reviving its anemic prime-time lineup at a time when a majority stake of the company is in the process of being sold from parent General Electric Co. to cable giant Comcast Corp.

The leading scenario is for Leno’s late-night show to shrink to half an hour and then be followed by O’Brien at 12:05 a.m. Even though Leno’s workload would be cut in half, his estimated $30-million annual salary would not be, sources close to the comedian said.

Restoring Leno to his former slot represents a tacit admission by NBC that its daring move to replace him with O’Brien and shake up its 10 p.m. time slot was a huge mistake. When NBC Chief Executive Jeff Zucker made the decision in September 2004, it was done as a defensive measure to keep O’Brien from defecting to a rival network. Also, though Leno was No. 1 then, NBC was betting that the younger O’Brien would be ready to take over the “Tonight Show” desk and keep the program fresh for the next generation.

But as Leno’s late-night exit date drew closer and he considered competing against O’Brien, NBC gave Leno his own show at 10 p.m. It was a plan that NBC hoped would allow it to have its cake and eat it too.

Instead, both moves proved to be big disappointments. Leno’s show has not performed well at 10 p.m. and O’Brien has not been able to fill Leno’s shoes at 11:30 p.m.

Since premiering in prime time in September, Leno’s show has averaged 5.34 million viewers, according to Nielsen. That’s a 29% drop from the same period last season when it was running dramas such as “Law & Order” and “ER.”

NBC has publicly stood by its decision to put Leno on in prime time. One of its key arguments has been that although Leno’s numbers are lower than the dramatic fare that the network used to run in that hour, the show’s production costs are much cheaper.

Though NBC may be saving money on Leno, the local stations that carry the network’s programming across the country are feeling the pain of Leno’s weaker ratings. The affiliates need the network to deliver a big audience at 10 p.m to feed into their late local news, which is where they make as much as 33% of their revenue.

Leno’s declining ratings have led late local news at many NBC stations to fall by as much as 30%. The affiliates were patient with NBC in the fall when Leno’s prime-time show premiered, but now many are griping to the network. NBC has acknowledged that Leno’s performance has become a major issue for their stations.

The network’s affiliates aren’t the only ones that have been vocal about Leno’s lackluster performance. The creative community has been bitter about NBC turning its back on 10 p.m. dramas that gave the network beloved signature shows such as “Hill Street Blues,” and “ER.”

“I feel they should take down their American flag and put up a white one,” cracked Peter Tolan, executive producer of FX’s hit drama “Rescue Me,” last year about NBC’s decision to put Leno in prime time. John Wells, who was an executive producer of NBC’s “ER” and “The West Wing,” said last fall that he was “disappointed that NBC no longer has the time periods available to support the kind of critically acclaimed series that was for so many years the hallmark of their success.”

NBC would have to scramble to find programming for the 10 p.m. hour that can be ready by March. The network would probably use its veteran news magazine “Dateline” as a stop-gap measure and shift some of its current hourlong dramas to Leno’s slot as well.

Leno’s woes in prime time have been well-publicized, but O’Brien’s move from 12:30 a.m. to 11:30 p.m. has been equally traumatic. He trails CBS’ “The Late Show with David Letterman” by about 2 million viewers. The two shows are tied in the coveted adults 18-49 demographic. Leno routinely beat Letterman in both categories.

On Thursday night, Leno addressed the situation on his show, joking that he didn’t think the rumors were true because “it’s always been my experience that NBC only cancels you when you’re in first place. So we are fine. We are OK.”

O’Brien’s camp is keeping quiet and he, unlike Leno, did not address Thursday’s news on his show. In a statement, NBC said: “We remain committed to keeping Conan O’Brien on NBC.” NBC is probably trying to find some wiggle room with O’Brien. His contract, which pays him about $25 million a year, has a $40-million penalty fee if NBC were to force him out as host of “The Tonight Show.”

One point of contention is whether O’Brien’s program would continue to be called “The Tonight Show” even if it follows Leno’s 11:30 p.m. program. Leno, sources said, is more concerned with regaining his old time slot than wrestling over a title.

Whether Walt Disney Co.'s ABC or News Corp.'s Fox would go after O’Brien remains to be seen. It was Fox’s pursuit of O’Brien six years ago that led NBC to set up the Leno succession plan in the first place.

Fox doesn’t have a late-night show, but a senior executive at the company downplayed the idea that it would chase O’Brien.

ABC now runs the news magazine “Nightline” followed by its late-night show hosted by Jimmy Kimmel. “Nightline” has actually performed decently for the network and is significantly cheaper than O’Brien’s show.

Times staff writers Maria Elena Fernandez and Matea Gold contributed to this report.