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Late last year, in a move that at the time was billed as innovative and cost-effective, NBC moved former The Tonight Show (Tonight) host Jay Leno to the 10 p.m. time slot (he was previously in the 11:30 time slot), abandoning all scripted primetime dramas and creating The Jay Leno Show. The reigns to Tonight were then given to successor-in-waiting Conan O’Brien, as the network hoped that Leno would still prove to be a big ratings draw at the earlier time slot and that the show would cost significantly less to produce than a typical primetime drama.
Unfortunately for NBC, the gamble failed miserably and approximately two weeks ago, NBC announced that it would be shuffling its lineup. The network hoped to move Leno to the 11:30 time slot (when Tonight typically begins) and push Conan back to the 12:05 time slot. However, Conan refused, arguing that by moving Tonight to a later time, the network was undermining the integrity of the show, which was something Conan said he could not participate in. Conan’s refusal to move touched off to two weeks of continuous PR headaches for the network, and ultimately cost NBC more than $40 million in an exit agreement signed last week with Conan. Although the behind-the-scenes wrangling over Conan’s departure has given the late-night hosts of all networks plenty to joke about, the negotiations over Conan’s contract and subsequent exit agreement presented two interesting legal issues.
First, during the settlement negotiations, a unique contractual issue arose, where Conan argued that when he agreed to become the host of Tonight, a show with a long and prestigious history, he essentially was agreeing to become the host of the show at the 11:30 time slot. By moving the show to a 12:05 start time, Conan argued that NBC was in breach of its contract because he was no longer the host of Tonight; instead, the move to 12:05 pushed the show into the next day, meaning the show was no longer hosted “tonight,” but rather in the early morning. NBC, on the other hand, responded that Conan’s contract contained no time slot provision specifying when Tonight would be aired. This dispute weighed heavily in the negotiations and has led many prominent entertainment attorneys to speculate that, in the future, any contract that could foreseeably become subject to this type of dispute will undoubtedly contain a provision stipulating the appropriate time slot for a particular show.
Conan and NBC finally reached an agreement paying Conan and his staff approximately $45 million, but this agreement also provided what could turn out to be a very interesting legal clause–Conan cannot disparage NBC or any of its executives as part of the agreement. Conan’s settlement also prevents him from hosting a new show before September 1, and there are additional restrictions on his appearing in print and on-air. While he can do guest appearances as a character on a TV show, he can’t do interviews, according to people familiar with the situation. The most interesting part of this agreement will be whether Conan, who makes his living through disparagement and comedy, will be able to abide by the terms of his agreement. In a quote from the Wall Street Journal, Pierce O’Donnell, a lawyer who specializes in entertainment and has worked on cases involving NBC in the past, said, “There are probably ways for Conan to get around the nondisparagement clause, but he will have to be very, very circumspect.”
All parties, myself included, agree that while NBC may have had good intentions, they ended up handling this fiasco poorly. The only silver lining for the network has been the ratings boon for Conan’s farewell shows and the incredible amount of media attention this dispute has received, which could boost Leno’s ratings upon his return. Nonetheless, this scenario will undoubtedly lead to an emphasis in future contract negotiations for time slot specific shows to have provisions stipulating when the show will be aired, and could change the face of contract negotiations for certain types of shows. Also, NBC and its attorneys will certainly be listening to hear what Conan has to say about the network. While we may not have heard the last of Conan, if I were a betting man, I would say we have heard the last of Conan bashing NBC and its executives. And why you ask? I can think of 45 million reasons…
– Blake Carter
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