CONAN OBRIEN LEAVING NBC

NBC made the announcement early Thursday that O'Brien will conclude his "Tonight" show run, seven months after O'Brien took the reins from Leno.

O'Brien landed the "Tonight" show after successfully hosting "Late Night," which airs an hour later, since 1993. But he quickly stumbled in the ratings race against his CBS rival, David Letterman.

Under Leno, the "Tonight" show was the ratings champ at 11:35 p.m. Eastern time, but he proved an instant flop with his experiment in prime time.

Reports say the settlement is worth $40 million and could bring down the curtain on O'Brien's stint on "Tonight" as early as Friday night. The Wall Street Journal says O'Brien would get $32 million and that the network agreed to pay his staff $12 million in severance.

TheWrap.com, one of the first media outlets to carry word of the pact being finalized, quotes O'Brien's manager, Gavin Polone, as saying O'Brien will supplement the severance NBC gives his staffers with money from his own pocket.

TheWrap's Sharon Waxman says Friday will indeed be it for O"Brien on "Tongiht," and she believes Leno will return to the spot March 1.

The biggest immediate plus for NBC in buying-off O'Brien, notes CBS News correspondent Michelle Gielan, is that the jokes at its expense will finally stop - such as O'Brien kidding, "I should have known something was up when NBC sent me a 2010 calendar that only went up to January."

Even though NBC is paying O'Brien so much to leave, the decision might still make financial sense with higher ratings overall after Leno moves back to late-nights, TV Guide Executive Editor Craig Tomashoff observed to CBS News. "The main thing that NBC will get out of this is, hopefully, a little bit better ratings in prime time," he says. ... A lot of this is coming from local affiliates who've seen phenomenal drops in ratings because no one is watching Leno" during primetime.

TheWrap's Sharon Waxman agreed, telling "Early Show" co-anchor Maggie Rodriguez Thursday, "The big question remains, will the viewers come back? Will the ratings go back to where they were? And the irony, of course, is that Conan's ratings have been through the roof since this whole thing started."

Leno joked Thursday night that, "The rain (hitting California in recent days) couldn't have come at a worse possible time. Today was the day NBC was supposed to burn down the studio for the insurance money."

But the skies now seem clear for O'Brien, who's not only pocketing some big cash, but also could be in line to ride his wave of renewed popularity to a rival network.

Fox is said to be interested.

Waxman says O'Brien will be barred from working for another network until September.

AP