Leno Back To Late Night? (UPDATE!)

Thursday: 3:39 PM:
According to TMZ.com, following the conclusion of the Winter Olympics in March Jay Leno is going back to his 11:30 PM time slot.  At this point it is still unclear if Jay will continue with a 30 minute show and Conan will come on after, or if Jay will go back to his hour-long format and NBC will say goodbye to Conan.

UPDATE:
Friday, 11:00 AM:

The rumors continue to swirl this morning as the future of The Tonight Show with Conan O'Brien appears in definite jeopardy.  Amid the chaos, NBC issued two statements Thursday.  First, expressing support for Leno and then unofficially indicating The Jay Leno Show had not been canceled.

For now it appears NBC has given O'Brien an ultimatum: Move to the midnight slot or get out.  Although O'Brien's current contract could allow NBC to block him from moving to another network for 2 years, TMZ is reporting that they will let him go if he gets another offer and give Leno a full hour.

After originally touted as a bold, cost-cutting, and industry-changing move back in December of '08, Jay Leno's move to prime-time only survived a little over a year.  NBC CEO Jeff Zucker's strategy behind the reasoning of the original move was to save the company upwards of $200 million in programming costs while still managing to keep the network's No. 1-ranked late-night talk-show host Leno away from competing networks.  However, this plan only works if your No. 1-ranked host continues to garner No. 1 ratings.

According to The Wrap, at the heart of the issue are NBC executives' concerns that local affiliates will start bailing on The Jay Leno Show if the line-up remains as-is.  Since local sweeps periods are still used to set ad-rates (and we all know that programming is just what occupies the time between the ads), with Leno negatively impacting local news ratings affiliates are already under intense financial strain to make a change.

As the search for new 10 PM programming continues, NBC will most likely use Dateline, USA dramas, and unaired reality shows as temporary replacements.

One potential problem for NBC: O'Brien's contract includes a $40 to $45 million penalty fee if the network forces him out of The Tonight Show.  A possible resolution to this problem could be that Conan keeps the title of the show while Leno is moved to the 11:30 PM time slot.