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take any late-night show Fox decided to program, that clause had been dropped from more recent agreements. With the network never having made a dent in late night, the stations loaded up on syndicated reruns of recent sitcom hits like The Office and Family Guy, along with perennials like Seinfeld, which always rated well. The shows were expensive and, making the issue even more complicated, the stations, short of money during the recession, had secured what were known as barter deals for many of them. That meant that instead of dealing in cash, the stations offered the syndicators big chunks of commercial time in each show.

In order to insert Conan at eleven p.m., after the late local news on the Fox stations, the stations would have to relocate the sitcom reruns; in doing so, however, the barter deals would become far more complex. If the sitcoms slid back past midnight on the schedule, the prices of the commercials would change. All the deals would likely have to be renegotiated.

Peter Rice was undaunted by this prospect. By his calculation, Fox would have to buy the stations out of their expensive barter deals at a cost of something approximating $100 million. That didn’t include the start-up costs for a new late-night show, which could run to another $70 million. Rice and Reilly still wanted to do it. The word from the advertising executives was positive; they had already started to receive calls from big clients like Intel, Ford, and American Express. They all wanted in on a Conan late-night show on Fox, convinced it would be a demographic home run.

Even so, the stations remained cool, approaching icy, to the idea. Like NBC’s station group, Fox’s tended to be led by men in their fifties and sixties—a Jay crowd. If Jay had come on the market instead, Reilly and Rice knew they could have signed him and simply flipped a switch: The stations would easily have lined up. But Conan was again proving to have a narrower appeal to station owners.

Reilly and Rice knew there was another reason they faced such a high degree of difficulty in completing a Conan deal: Fox and its stations were already on the brink of a civil war of sorts. Nationally, broadcasters had finally reached a point where they were uniting in demanding compensation from cable systems for the right to retransmit their programs onto cable. Retransmission rights suddenly became a path of survival for the struggling networks, most of which were projecting losses in their network business. (According to one inside estimate, NBC was looking at about a $300 million loss.)

Subscription fees from flush cable operators could change all that. The problem was, networks themselves could not extract sub fees from cable systems. Local stations controlled the rights the cable operators would pay for. Even though the vast majority of programs viewers wanted to see were being supplied (and paid for) by the networks, the local station was in line to claim the $1.50 and up per subscriber that the cable systems might be compelled to pay.

Fox’s plan was to negotiate tough deals with its affiliates, pointing out that the leverage they had over cable systems mainly came from the programming on Fox: NFL football, American Idol, House, and Family Guy. The Fox network shelled out the big bucks to acquire that programming; why should it not command the largest piece of the retransmission money?

So just as Rice and Reilly were contemplating pitching the stations on the merits of removing those high-priced and high-rated sitcom repeats in favor of the guy who just disappointed NBC on The Tonight Show, the Fox network was readying an onerous demand on retrans fees. If a station was able to get $2.00 per subscriber from a cable operator, Fox intended to skim $1.75 off the top—that was the price for obtaining all that great network product. But Fox’s executives didn’t kid themselves that the stations were simply going to bend over and take this spanking without a whimper.

When Reilly and Rice had a chance to sit down with Conan’s group, the message back sounded beyond promising. The