It’s official folks, The Jay Leno Show has been canceled in the 10 pm EST time slot.

Nikki Finke is reporting that the announcement was just made at the winter meeting of The Critics Association. Diane Haithman, who is reporting for Nikki Finke at the meeting, states:

The Jay Leno Show. On February 12th, Jay Leno will no longer air at 10 PM. While it was performing at acceptable levels for the network, it did not meet our affiliates needs, and we realized we had to make a change. My goal right now is to keep Jay, Conan and Jimmy as part of our late night line up. I have spoken to all of them and proposed that The Jay Leno Show move to 11:35 PM, Conan move to 12:05 AM, and Jimmy to late night at 1:05 AM. As much as I would like to tell you it’s a done deal, we know that’s not true, “ adding that the talks are ongoing.

So all the rumors from the other day are true, and what Conan will do is still unclear. Unnamed sources close to Conan told The New York Times on Jan. 9th that he has not yet accepted NBC’s plan, and is not likely to very soon.  What this means is anyone’s guess, but it could very well mean he will leave NBC.  TMZ has a break down of Mr. O’Brien’s three options:

Option 1: Quit the show and spend the next four years at the beach. If Conan does this, our sources say NBC would have to pay him the value of his contract. We’re told it’s a five-year deal, worth as much as $20 million a year. With four years to go, Conan could conceivably get $80 million. But given his skin pigmentation and, possibly, his ego, the beach is unlikely.

Option 2: Go to either FOX or ABC. This is where it gets complicated. If Conan were to strike a deal with either network to do a competing show, any salary Conan pulls in would offset the obligation owed by NBC. So, for example, if Conan made $20 million a year at NBC and ABC were to pay him $15 million a year, NBC would only owe Conan $5 mil a year for the four years remaining in his contract.

Option 3: Eat crow and take the 12:05-1:05 time slot. If Conan takes this option, our sources say it’s likely NBC would negotiate a new contract with the same salary Conan was getting before. Even though the salary isn’t supported by the time period, it’s cheaper than paying him off. NBC, we’re told, prefers this option, because Conan would not be splintering Leno’s rating by going to another network.

Why in the world would he choose option 3? If he can go for option 2, go for it, barring that, option 1 sounds pretty sweet. The only winner in option 3 is NBC, and somehow I don’t think he’s going to be too excited about helping out his current employers.

More news is sure to come this week.