I remember that, Jay had said later in an interview that he really didn't want to give it up but NBC was pushing for it so they didn't loose Conan. He also said he was going to just do something else and that is why NBC scrambled to give him another show so he didn't go to another network and compete against them, NBC truly believed he would just retire and that isn't what he was going to do.
NBC had him sign a two year deal last summer figuring that Conan would get the ratings up and then they wouldn't have to worry about Jay but both shows rating were falling at warp speed and the affiliates are complaining about not having a good drama on before the news and most of them said they were going to drop Jays show and air local shows and reruns if they didn't drop Jay, unfortunately they signed a deal with Jay and they have to give him a show in order to keep him off the air on another network or they will have to pay him off and they are choosing to pay off Conan instead.
I like Jay, but I think he needs to step in and say hey, you guys screwed up and not Conan so just pay me off and I’ll go do something else. If they give the Tonight show back to Jay, it will be tainted. I wouldn’t mind seeing him do something on Speed, they could do a show somewhat like Gears or a restoration show and they could work on his cars.