Affil concerns could derail O'Brien-Fox talks


When Conan O'Brien kicks off his U.S. comedy tour Monday night, the most important critics to impress will be the owners of Fox stations.

Talks between Fox and O'Brien's reps have made significant progress during recent days toward a deal that would bring the late-night host back to broadcast TV. But affiliate concerns about airing the new venture threaten to derail any agreement.

Fox entertainment chairman Peter Rice and entertainment president Kevin Reilly have been in regular discussions with O'Brien's camp, led by agent Rick Rosen, manager Gavin Polone and lawyer Leigh Brecheen, including at least one face-to-face meeting on the Fox lot over the past two weeks.

While such issues as O'Brien's specific compensation and ownership of a new show are still being discussed, the host has agreed to key concessions including lowering his salary and slashing production costs.

"It will be leaner and meaner," a source close to the negotiations said.

But the host won't commit to Fox unless the network can guarantee that stations will air his show in all or nearly all of the country.

As of now, that's far from a done deal. Some Fox affiliates are less enthusiastic about taking on O'Brien's show. Airing it means affiliates have to eat the cost of any sitcoms or other syndicated programs already booked for the late-night slot while already kicking up a retransmission fee to carry the network.

"The question is how much can one network ask of its affiliates?" an insider said.

Dissension on the Fox side is worrying negotiators that a deal might not be complete in time for the network's upfront presentation to advertisers May 17 -- if a deal happens at all. Without clearing the show nationwide, O'Brien and Fox would risk an uphill battle on several fronts. The show would generate lower national ratings and might fight the perception of having distribution issues, which would increase the risk of stations abandoning the format. Affiliate threats to stop airing NBC's "The Jay Leno Show" was a key factor in the network's decision to kill that show and return Leno to late-night.

For this reason, O'Brien's team is looking at alternative options, declining to enter exclusive negotiations with Fox. That said, Fox and O'Brien have cleared several points of agreement.

Fox and O'Brien want the show to air on Fox stations from 11 p.m.-midnight, which would give it a 35-minute jump on NBC's "The Tonight Show With Jay Leno" and CBS' "Late Show With David Letterman."

The budget for the new show would be considerably less than O'Brien's most recent stint on NBC, getting the host back to his scrappy roots after trying to fit the more bloated "Tonight Show." O'Brien's "Tonight" cost about $90 million a year, including O'Brien's $12 million salary, but Fox is aiming to pay less than $60 million.

O'Brien's show likely would be based in Los Angeles. Although some critics felt NBC mistakenly moved O'Brien from New York when he took over "Tonight," the host has not discussed with Fox the possibility of moving back. Keeping the show in Los Angeles would make it easier to book Hollywood talent.

There are, however, several open issues. O'Brien wants ownership of his new program like Letterman, whose Worldwide Pants owns "Late Show." But Fox would prefer to keep O'Brien as a highly paid employee, similar to NBC's relationship with Leno on "Tonight."

Both sides remain hopeful that a deal will be struck, but the sense is that the affiliates now hold the keys to making that happen. The comedy tour, which launches tonight in Eugene, Ore., might help matters.

O'Brien will generate plenty of headlines during coming weeks, which should help keep his profile strong as his team tries to lock down a deal. Plus, starting Monday night, local station owners get a chance to sample O'Brien's act in person.
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