That represents a two-year extension of Letterman's current deal, set to expire next year.
CBS will also pay Letterman's production company, Worldwide Pants, a smaller licensing fee than it is getting now, consistent with its efforts to cut programming costs across the board with the downturn in television advertising, according to two executives close to the negotiations. The executives, who spoke on condition of anonymity because the deal isn't final, would not say how much that fee would be cut.
It's not immediately clear what that would mean for Letterman's paycheck, which has been reported in the range of $30 million to $35 million. His salary is set by Worldwide Pants, not by CBS.
Letterman, 62, is the dean of late-night talk show hosts, and he's been at CBS since losing the internal competition to Jay Leno for the NBC "Tonight" show gig in the early 1990s.
His competition at NBC is now Conan O'Brien, to whom Letterman has been getting in a few good-natured jabs since O'Brien's debut last week. O'Brien started strong in the ratings but faded as the week went on.
A new host at "Tonight" offers an opportunity for Letterman, whose "Late Show" has trailed NBC in the ratings for more than a decade. It cuts both ways, though: Letterman is a familiar face for whom many viewers have formed opinions, and it may be tough for him to draw in new people.
The deal by no means is an indication that Letterman is looking toward retirement in 2012, when he will be 65, an executive said. He signed a three-year extension the last time, and near the end of his career is looking to keep the deals shorter.
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