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As biz model crumbles, Zucker creates a 10 p.m. strip for Leno, merges NBC and the studio

Jay Leno is staying at NBC with a show at 10 p.m. weeknights. The network has signed the "Tonight Show" host to a new agreement that will allow NBC to keep him from going to a rival broadcaster with- out breaking the network's agreement with Conan O'Brien to take over "Tonight" next year. The new deal is expected to be announced at a news conference today.

NBC Universal chief Jeff Zucker signaled that significant changes were afoot at the network earlier Monday at the annual UBS Global Media and Communications Conference in New York. Later in the day, the network announced an executive reorganization that merged the network and the studio and sent veteran Peacock players packing.

"Can we continue to broadcast 22 hours in primetime? Three of our competitors don't," Zucker told the annual gathering. "Can we continue to broadcast seven days a week? One of our competitors doesn't."

The Big Three program 22 hours a week over seven days, but they don't program originals on Saturday, and only CBS runs all-original scripted programming on Fridays. Fox programs 15 hours a week over seven days. The CW and MyNetworkTV do less and program only six nights a week.

While broadcasters have been looking at the possibility of cutting back on the hours they program, NBC's moves are the most dramatic response to the changing realities of the TV business since the WB and UPN merged in 2006.

But in addition to adapting to the diminishing returns in primetime ratings, the Leno move also keeps him from jumping ship to rival networks where he could have been tough competition for O'Brien.

NBC notified O'Brien of its plans for a Leno-fronted 10 p.m. show some time ago, and he got on board.

"It's great for us," a source close to O'Brien said. "We're really excited because the alternative is him leaving angry and going to another network, competing against Conan. What it means to the drama business is another story."

Keeping both men in place, however, could be a tricky balancing act as the network seeks to hype O'Brien's ascension without allowing him to be upstaged by Leno's return — presumably in the fall.

"This is a win-win for everyone," said Shari Anne Brill, a programming expert and executive with New York-based ad buyer Carat. "Why would you want to lose a talent like Leno to the other guys? Why would you want to give ABC an opportunity like that?"

Horizon Media research chief Brad Adgate said that the move will have the added benefit of not being as expensive as a drama. Adgate wasn't bothered by the format, rumored to be a talk show and/or variety program.

"Talk shows work in daytime, and they work in late-night, and they work in cable at that hour and in primetime," Adgate said. "The question is not so much about the size of the audience as it is about can they make a profit out of it."

While programming primetime should cost NBC significantly less with Leno than with five hourlong series, the network essentially is wiping out any long-term windfall a hit series could achieve in domestic syndication and foreign; a talk format has limited backend possibilities beyond a time-shifted second window on cable.

As host of "Tonight," Leno has averaged 4.8 million viewers and a 1.3 rating this season. NBC may be able to grow that number given the new show's earlier time period but not to a degree that will make a talk show competitive with most dramas airing at 10 p.m.

The move will take pressure off NBC's struggling entertainment unit and impacts the competitive field in significant ways. Although rivals might be disappointed that Leno will not be on the market next year, CBS and ABC will benefit by no longer having to compete with NBC's 10 p.m. dramas like "Law & Order: SVU."

Although the industry guessing game over Leno's fate is now over, the move triggers a fresh round of question marks as to which of NBC's series will make the cut for a reduced primetime schedule.

A broadcast insider said that NBC's reasoning could be construed as counterproductive because "it's like the automakers shutting down plants: It saves some money short-term, but it also prevents an opportunity to make any."

After the UBS event, Zucker told THR that NBC intends to remain competitive. "It's not giving up," he said. "It's not retrenching. It's not throwing in the towel."

Paul J. Gough reported from New York; James Hibberd reported from Los Angeles.
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