Conan's 'Tonight Show' contract revealed

By Matthew Belloni

If there was one big mystery in the Great Late-Night Fiasco of 2010, it was whether NBC actually specified in Conan O'Brien's contract that “The Tonight Show” had to begin at 11:35 p.m. This seemingly small detail was of crucial importance to O’Brien, who ended up exiting the network rather than accepting NBC’s offer to move him and “Tonight” to 12:05 a.m. -- a potential violation of his deal, which was never made public.

But we've finally tracked down a copy of the O’Brien contract, and -- lo and behold -- NBC did define “Tonight” as the series that airs at 11:35 as far back as 2002. However, what may have emboldened NBC to move the program anyway was the absence of that key language from later amendments to the deal.

Here's the backstory:

The 2002 timeslot language was part of an amendment to O’Brien’s first contract with NBC, which dated back to his 1993 hiring as host of "Late Night." The provision stipulated that if Jay Leno ever left, O’Brien would be installed as host of “Tonight,” which is described as the “series that airs at 11:35.”

The phrase itself is not only a pretty damning indication of the legal leverage the O’Brien camp held over NBC to extract his hefty $37.5 million-plus settlement, but reveals another new wrinkle in the GLNF2010: The 2002 timing means O’Brien had been waiting seven years for “Tonight,” not the five-year span that is generally reported (for those of you scoring at home).

Moreover, in his original deal to host "Late Night," that show is described as the "second network series after the end of primetime."

Case closed, right? Not exactly. As is common, O'Brien's deal was modified several times. In a 2004 amendment to the deal -- the one that officially promised O'Brien he'd get "Tonight" after a five-year waiting period -- there's no mention of the timeslot.

Insiders familiar with settlement negotiations say NBC jumped on that fact to argue that the "operative" deal was silent on the timeslot issue and even contained some NBC profit-participation boilerplate allowing NBC discretion to move shows as it chooses. 

One problem with that argument: Any lawyer worth his 5% commission knows you've got to read an amended contract in the context of all other prenegotiated elements. O'Brien's 2004 deal incorporated by reference and ratified all the terms of his prior deals -- including the "Tonight Show" definition -- and says any conflicts between NBC's standard terms and the negotiated terms are governed by what's been negotiated.

NBC countered that if the 11:35 timeslot was so important to Conan, his team should have thought to put it in the 2004 amendment -- the one that actually gave O'Brien the show. But Team Coco's response was that they didn't have to. The show was already defined in the deal and was an established institution that had aired directly after the local news for decades.

The differing contractual language may also explain the choice of words NBC Universal CEO Jeff Zucker used in his Jan 18 interview with PBS' Charlie Rose, Zucker's only public comments on the case. Asked by Rose whether O'Brien's deal defined when "Tonight” would air, Zucker paused and said: "In Conan's current [emphasis ours] contract, there is no guarantee of timeslot for 'The Tonight Show.'"

There were other sticking points in the tense negotiations between O'Brien's team -- led by litigator Patty Glaser, deal lawyer Leigh Brecheen (who had also worked on David Letterman's deal to move from NBC to CBS), agent Rick Rosen and manager Gavin Polone -- and the NBC crew led by execs Marc Graboff, Jeff Gaspin and Andrea Hartman and litigator Scott Edelman with a team from Gibson Dunn & Crutcher.

NBC argued that O'Brien would have trouble proving his damages in court beyond what NBC owed him on his contract. But Team Coco had a nice bit of language in its favor in the 2004 deal, which expressly discusses what Conan gave up in order to wait around for "The Tonight Show." According to the contract, O'Brien "could earn more than double the contracted salary for ["Late Night"] if [O'Brien] were to enter into a contract with a third party at this time." Instead, he gave up that increased money to rely on the promise of a move to the 11:35 "Tonight Show." That language likely would have made it easier for Glaser to paint a picture of a host who sacrificed millions to wait for a show that NBC attempted to materially change.

With whom would an arbitrator or jury have agreed? We'll never know, and both sides say they're happy with O'Brien's settlement of $32.5 million, plus $5 million for executive producer Jeff Ross and additional money for the show's 140 staff members (O'Brien paid a lot of that out of his own pocket).

But given that O'Brien's team got him the big payday, plus the right to look for another job immediately, plus no mitigation or offset damages from any new salary, the settlement suggests NBC was more than a little afraid of how this might play out -- and that Conan's "Tonight" deal wasn't the weak contract NBC wanted us to believe it was.

Comments

[MonsterKilledThePilot]

What an interesting read. Thanks for posting!

[Max Kennerly]

Can you post a copy of the contracts?

[Matthew Belloni]

Max, I agreed not to post the contract as a condition of getting access to it. Sorry about that.

[L]

The information is much appreciated. Glad to know Conan is surrounded by people who know what they're doing.

[Tom DeSantis]

I agree, very interesting for us nerds :) Thanks again!

[Max Kennerly]

Bummer! Thanks for the report; I'm not a late-night TV person but was very interested in the details of the negotiation.

Please also thank your source, too.

[Jim Patzer]

Matt, thanks for sharing this with all of us. Since you have an inside source, any chance you can dissolve the mystery surrounding Conan's immediate future? I think what we all want to know is:

(1) When can Conan be back on television? We know he can't host his own show until September 1, but when can he do an interview? When can he do surprise walk-ons or guest host other shows? And what about the reported anti-disparagement clause; what are the terms of it and how long does it last?

(2) Who controls the characters and comedy sketches Conan created during his tenure with NBC? If NBC, can Conan continue to use them if he renames them first? Does it make any difference if it's a character (the Masturbating Bear), a sketch (In the Year 3000) or a stage name for an actual person (LaBamba)?

[Belinda Gomez]

Did Gavin Palone write this post? Leno's buy-out would have cost NBC twice what Conan did. Ross, the EP, was the "genius" who decided that the edgy late-night stuff wouldn't play at that time-slot and thus, set the wheels in motion to destroy the show.

The writing team has WGA contracts, and Conaco (Conan's production company) has to honor those contracts. So, yes, Conan is paying them, but he had to.

[SunElTypeW]

"The writing team has WGA contracts, and Conaco (Conan's production company) has to honor those contracts. So, yes, Conan is paying them, but he had to. "

Like all television series who have their WGA writers under contract, Conaco can unilaterally terminate said contract if the show is canceled. So no, he doesn't HAVE to pay them, but he is anyway.

[tinister]

Was going to say the same thing. Conaco only had to honor the WGA contracts as long as there was in fact a show. As soon as NBC pulled the plug - Conanco no longer had any contractual obligation. Conan paid out of his own pocket out of principle.

I guess now you will argue that he didn't pay enough? LOL

[Jason JW]

Looks like it's time for Belinda to get back to her desk at NBC and post some more of their marching-order spin. Say "hi" to Dick Ebersol when you see him in the hallways, Belinda!