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60 second skit costs $1.5 million -

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TRACY BOWDEN, PRESENTER: It's a world away from the grim reality of Haiti but in the unreal world
of American television it's been a tumultuous week.

The late-night talk show format has been a vital slot for decades but this year NBC took a gamble
when it replaced Tonight Show veteran Jay Leno with a younger host, Conan O'Brien.

NBC's evening ratings soon slumped, costing the network millions.

When NBC management announced it was moving Leno back to the Late Show, Conan O'Brien refused to
budge, sparking an on-air slanging which has cost the network tens of millions more and made it a
national laughing stock.

It's been a Godsend for Leno's long time rival David Letterman who has had his own share of recent
controversy.

VOICEOVER (over music and titles): It's the Late Show with David Letterman!

CONAN O'BRIEN (excerpt from the Tonight Show): A lot more show coming up, so much more show. Stick
around, we'll be right back!

JAY LENO (excerpt from the Tonight Show): I'm excited. I'm honoured to introduce my first guest -
the 44th President of the United States. Please welcome President Barack Obama.

TRACY BOWDEN: At a time when most Australians are tucked up in bed as many as 10 million Americans
are tuning in for their daily fix of chat, comedy and music on the late night TV talk shows.

DAN AMUNDSON, CENTRE FOR MEDIA AND PUBLIC AFFAIRS: These go back into the late 50s as a brainstorm
of Fritz Weaver at NBC who invented the Today Show and thought they should have a late-night
equivalent called the Tonight Show and that really kind of kicked the whole thing off.

ED MCMAHON (excerpt from the Tonight Show): Here's Johnny!

TRACY BOWDEN: Johnny Carson was the king of talk. With sidekick Ed McMahon his reign on NBC lasted
for 30 years.

LISA DE MORAES, TV COLUMNIST, WASHINGTON POST: Johnny Carson had such a long run on the show and
he's considered by many to be the best there ever was, that nobody has come close to touching him
as a late night host. He really was superb.

TRACY BOWDEN: Stand-up comedian Jay Leno took over the Tonight Show from Johnny Carson back in
1992.

Around the same time David Letterman started his own Late Show on CBS.

But after years of cosy rivalry this year the Late Show format has undergone its biggest shake-up
in decades.

VOICEOVER (over music, excerpt from the Tonight Show): From Universal Studios in Hollywood, it's
the Tonight Show with Conan O'Brien.

TRACY BOWDEN: Forty-six-year-old Conan O'Brien, a former writer for Saturday Night Live and the
animated series The Simpsons took over as host of the Tonight Show after Jay Leno launched his own
evening talk show in September.

JAY LENO: Now folks, I thought maybe I should address this...

DAN AMUNDSON: NBC found itself I think in a position where they had more talent than they had shows
to fit in. And they had promised Conan O'Brien the Tonight Show slot about five years ago.

And so they needed to try and also keep Jay Leno from going somewhere else and competing. So they
came up with this idea of a 10 o'clock show for him.

TRACY BOWDEN: The night owl shows are big business, said to make the big two - CBS and NBC - more
than $300 million each a year in ad revenue.

LISA DE MORAES: What they're really selling is the opening monologue. That gets a lot of viewers.

TRACY BOWDEN: As columnist Lisa de Moraes explains, it made good financial sense at the time to
give Jay Leno an earlier timeslot.

LISA DE MORAES: The number for Leno that's been slung around most often is he's going to be making
somewhere between $30 million and $40 million a year which is a very good number.

But NBC still comes out ahead because the cost of producing a 10 o'clock show for him Monday
through Friday is so much cheaper than trying to produce original scripted drama series Monday
through Friday at 10 o'clock, which is what they had been doing and failing at.

TRACY BOWDEN: Over at CBS it was Leno's old rival David Letterman who was having a bad year,
sparking outrage when he told a joke about the daughter of former Republican vice presidential
nominee Sarah Palin.

DAVID LETTERMAN (excerpt from the Late Show): It was one awkward moment for Sarah Palin at the
Yankee game. During the seventh inning her daughter was knocked up by Alex Rodriguez.

TRACY BOWDEN: Palin called the comments sexually perverted and some viewers picketed outside the
program's studios in New York.

PROTESTER: This is just totally ridiculous. Women are entitled and children are entitled to be
treated with respect.

TRACY BOWDEN: Letterman claimed he was talking about Sarah Palin's older daughter Bristol, not her
14-year-old Willow who was at the baseball game.

DAVID LETTERMAN (excerpt from the Late Show): I would like to apologise, especially to the two
daughters involved, Bristol and Willow, and also to the Governor and her family.

LISA DE MORAES: He got a substantial rating spike. He actually managed to beat Conan three nights
of Conan's second week as host of the Tonight Show.

NEWSREADER: A CBS producer is under arrest this morning, charged in an alleged scheme to blackmail
David Letterman...

TRACY BOWDEN: Within months Letterman was forced to make an even more embarrassing apology over an
affair with one of his staff.

NEWSREADER: Admitted having sex with women who work on his show...

DAVID LETTERMAN (excerpt from the Late Show): My wife Regina, she has been horribly hurt by my
behaviour. And when something happens like that, if you hurt a person and it's your responsibility
you try to fix it...

TRACY BOWDEN: But Jay Leno had little time to gloat. Ratings for his new program quickly plummeted
from 18 million viewers to less than six million, costing NBC millions of dollars in lost ad
revenue.

NBC management was forced to take a drastic step.

(Excerpt from America This Morning, ABC):

PRESENTER 1: It appears Jay Leno will return to the Tonight Show on NBC.

PRESENTER 2: TMZ is reporting that Leno signed a new contract with the network. The deal will put
Leno back on the Tonight Show beginning at 11.35pm right after your local news. Last night...

CONAN O'BRIEN (excerpt from the Tonight Show): No matter what happens it's been a real honour to
sit in the same chair as Steve Allen, Jack Paar, Johnny Carson, Jay Leno and Jay Leno.

TRACY BOWDEN: Conan O'Brien refused to budge and soon NBC's in-house dispute had become a very
public slanging match.

JAY LENO: And of course the rain couldn't have come at a worse possible time. You know today was
the day NBC was supposed to burn down the studio for the insurance money.

DAVID LETTERMAN (excerpt from The Late Show): They just want Conan to quit and go away and do a
show in his basement. That's what they want.

CONAN O'BRIEN: It could be our last week. The good news is that until NBC yanks us off the air, we
can pretty much do whatever we want.

And this is the best part - we can do whatever we want and they have to pay for it.

That's right, ladies and gentlemen, total price tag for this comedy bit, $1.5 million! Sorry,
NBC...

TRACY BOWDEN: This skit proved to be the last straw for NBC management which reached a $45 million
settlement with its one-time star to move on.

Jay Leno will return to the Tonight Show desk in March. But after the events of this week he may
have a tough act to follow.

JAY LENO: This is all business. You know folks, if you don't get the ratings they take you off the
air. I think you know in this town you can do almost anything; if you get ratings they keep you on
the air.

TRACY BOWDEN: And Conan O'Brien's final show has been brought forward a week to tomorrow night.