Conan O’Brien’s “go to hell, NBC” statement is really brilliantly crafted; it calls attention to every horrible and stupid thing the network has done while not sounding whiny. He references the fact that the network gave Leno the chance it never gave him (since they stuck with Leno through his shaky start on The Tonight Show), the behind-the-scenes chaos of the network, and the fact that his ratings troubles are due in part to Leno’s failure at 10 o’clock — but all obliquely, so he can’t be accused of attacking Leno directly (even though Leno deserves it). Even his statement that he doesn’t want to displace Jimmy Fallon by moving to 12:05 is a sort of dig at Jay Leno, who has been perfectly willing to take away Conan’s time slot; but again, it’s not a direct attack on Leno, just a subtle implied comparison. It really does seem like he wrote most of it himself, and it reminds you that he is first and foremost a good comedy writer.
What I thought was most obvious about the network’s offer to O’Brien was that there was no scenario under which he would get to keep The Tonight Show for very long. Putting Leno at 11:35 was the most blatant stalking-horse for giving the whole show back to him; even if they gave him a half-hour and called it something else, they could eventually give him another half-hour just like before. But they had a contract with O’Brien and couldn’t just cut him loose. So they told him to move over, but that according to the terms of the contract he would still be hosting something called The Tonight Show. O’Brien had to know that he would never be allowed to keep even that fig-leaf; once NBC told him (reportedly) that they would choose Leno if they had to choose between the two of them, his fate was sealed. The only question was whether he would end it now or allow NBC to end it later. The network gets what it wants: Leno back at 11:35, and Conan can’t sue them. Proving that NBC may not know much about programming but it’s still pretty good at the ancient art of employee destruction.
Also, this probably goes without saying, but once Leno has the hour back, he’ll probably get good ratings (a combination of being more popular than Conan and having a less terrible 10 o’clock lead-in), and the whole thing will have worked out well for the network. I’d like to think it might be different, that he’ll be damaged goods, but in all likelihood it won’t.