The former "Tonight Show" host and current host of the 10 p.m. "Jay Leno Show" said he'd tried to avoid doing a show in prime time but was convinced by NBC that it could work. Now, he said, four months later, because of problems with NBC's affiliated stations and low ratings, network executives informed him they were canceling his show but told him he was still "a valuable asset" to the company.
For his part, O'Brien was all jokes on Monday night's "Tonight Show," even while conceding that this was in all likelihood his last week as "Tonight Show" host.
"It's hard to accept that soon I won't have a show, but Snooki and the Situation will," he quipped, referring to personalities on MTV's hit "Jersey Shore."
O'Brien did not give any hints about whether he and NBC have agreed to the final points in a settlement deal that would allow him to leave the network and possibly establish a new show elsewhere.
The protracted negotiations between O'Brien and NBC point to what may have been flaws in O'Brien's contract, said entertainment lawyer Jonathan Handel with Los Angeles-based TroyGould, but they also pose a problem for NBC: Dragging the affair out is bad for both the network and for Leno.
"The last thing NBC and Jay need is to be dragged through a longer PR debacle than they have been," Handel said.
NBC Universal president and CEO Jeff Zucker defended the network's decision to shift Leno back into the 11:35 p.m. time slot he held for 17 years before O'Brien took over "The Tonight Show."
"From a financial standpoint, this is the right move," Zucker said in an interview with The Wall Street Journal. "We didn't want to do it, because we wanted to keep Conan. But we're going to be fine, even paying Conan to go away."
He told the newspaper he was surprised at the "nasty" turn the shake-up had taken. "We were not surprised that Conan was disappointed in having his show back up a half hour. But we were very surprised and disappointed at how nasty it turned," he said.
Both O'Brien and Leno have taken shots at NBC since the late-night controversy began, with O'Brien once joking that NBC considered him such an idiot that he might be qualified to actually run the network. O'Brien has also aimed some barbs at Leno, saying, "I just want to say to the kids out there watching: You can do anything you want in life … unless Jay Leno wants to do it, too."
People close to the negotiations confirmed to ABCNews.com that O'Brien's exit agreement could include a "nondisparagement clause" that would stop O'Brien and NBC from saying negative things about one another.
But Polone told ABCNews.com that such a clause and questions about whether O'Brien would be able to move some his most-famous bits and character (see the next page) to a new show are in the periphery of the negotiations, and that staff severance continues to be the priority.
"When you're in a negotiation, you gotta try to get everything worked out from the top down perspective," he said. "I don't want to muddy the water [by] focusing on other things less important than people's lives."
In an interview with PBS's Charlie Rose, Zucker also said he did not regret his initial decision to promise the "Tonight Show" to O'Brien in 2004, saying that it kept O'Brien from leaving NBC at the time to take a job with a competitor.
The decision, he said, "allowed us to continue to enjoy great success both creatively and financially for the next 5½ years."