Sharon Waxman's The Wrap is reporting that NBC will pay Conan O'Brien to walk away from The Tonight Show and his contract dispute with NBC.
Waxman states that NBC executives, including CEO Jeff Zucker, held an all-night negotiating session Thursday to help come to the deal. O'Brien had rejected the network's move to push his show to 12:05 a.m. to make way for a return to late-night's 11:35 p.m. slot by Jay Leno, who previously hosted The Tonight Show.
Leno's prime-time program, the Jay Leno Show, has been a ratings disaster and will be pulled from the air next month. At the same time, O'Brien lost The Tonight Show's first place standing for late-night. So NBC wanted to retain some of its late-night polish.
There has been speculation that O'Brien might go to Fox to compete with NBC at 11:35, although he has denied it. It's not clear if the deal will preclude O'Brien from hosting a competing show.