Letterman Reported Going to CBS After NBC Bid Fails : Entertainment: Late-night talk show host expected to move to new network opposite Leno in $14-million deal.

Late-night television talk-show host David Letterman is moving to CBS, following a failed 11th-hour bid by NBC to keep him, sources close to the discussions said late Tuesday.

The decision followed a weekend of tense negotiations in which top NBC executives debated whether to give Letterman the 11:30 p.m. time slot occupied by “Tonight Show” host Jay Leno. Sources said that Leno’s supporters ultimately prevailed, however, and Letterman was notified that his demands could not be met.

NBC’s decision frees the acerbic Letterman to move to CBS as early as this summer, when his current contract expires. CBS has promised Letterman the 11:30 time slot as part of one of the most lucrative compensation packages ever offered a TV entertainer.

NBC, CBS and Letterman’s representatives declined comment on the deal late Tuesday. NBC is expected to discuss Letterman’s status on Thursday when entertainment chief Warren Littlefield meets with the nation’s TV critics, who are in Los Angeles to preview network programs.

Leno said he was unaware of NBC’s decision not to match the $14-million CBS offer for Letterman. “They told me they would have a decision at the end of the week. . . . Talk to the guy in the catering truck.” Sources said NBC is still in a quandary about what to do with Letterman’s former 12:30 a.m. time slot.

Comedian Dana Carvey, a “Saturday Night Live” regular known for his biting impressions of President Bush and Ross Perot and for co-starring in last year’s smash hit, “Wayne’s World,” has been approached as a possible replacement. Carvey, who wants to focus on making movies, remained undecided about what to do late Tuesday.

The decision ends several months of rancor between Letterman and NBC, much of it played out before the public on the comedian’s show. Letterman openly chided the network for its alleged obsession with penny-pinching and a stiff corporate mentality.

It also ends a long courtship by CBS Broadcast Group President Howard Stringer, who first approached the disgruntled Letterman more than six months ago. Stringer, seeking to dampen expectations, earlier Tuesday called Letterman’s chances of coming to CBS “a big if.” Stringer was responding to comments made Monday by CBS Entertainment chief Jeff Sagansky, who boasted that NBC would certainly not match the CBS proposal.

CBS is expected to make the Letterman announcement on Thursday.

CBS lured Letterman by offering him one of the richest agreements ever for a TV entertainer. In addition to receiving about $14 million a year, Letterman will be allowed to produce his own show as well as another late-night program following his on CBS. His compensation could climb even higher if he achieves certain benchmarks in attracting an audience.

For NBC, it came down to an issue over which decision would cost the beleaguered network the least amount of money.

The network was in the no-win situation of paying Leno $10 million if it broke its contract with “The Tonight Show” host or facing a $50-million penalty if it put Letterman on after 11:30 p.m.

Due to a “poison pill” clause in the CBS proposal that NBC had to match or exceed to keep Letterman, NBC would have had to pay Letterman a $50-million penalty if it put him on later than 11:30 p.m. CBS, of course, never had any intention of putting Letterman on at any time other than 11:30.

Leno, angry at the open speculation that some NBC executive wanted to dump him after less than a year as Johnny Carson’s successor as host of “The Tonight Show,” said that if NBC forced him out, he would be interested in doing a similar show at 11:30 p.m. on CBS.

CBS, which has never really been able to develop the late-night audience as successfully as either NBC or ABC, believes Letterman will finally give it the opportunity to carve out a “franchise” it so desperately wants.

NBC currently makes $70 million to $100 million a year from Leno and Letterman, and CBS believes its offer to Letterman would still leave room for a healthy profit.

However, the CBS gambit is not without risk. Unlike the days when “The Tonight Show” and Letterman carved out their niche and loyal following, there are now a host of competing late-night shows in syndication and cable. One juggernaut that Letterman will face at 11:30 is the syndicated “Arsenio Hall Show,” which is on several CBS affiliates.

Earlier story on F3