UPDATE 3-NBC nears decision to change Leno show

* NBC seeking to improve ratings

* Reports say network may move Leno back to late night TV

* Affiliates upset at lower ratings lead-in for news (Recasts reflecting late reports of a return to late-night)

By Sue Zeidler and Steve Gorman

LOS ANGELES, Jan 7 (Reuters) - NBC's experiment in moving late-night comedian Jay Leno to prime-time television looked to be near its end on Thursday amid several reports that the network will return Leno to its late-night lineup.

Speculation over Leno's future at the General Electric Co (GE.N)-owned network heated up four months after the longtime host of "The Tonight Show" launched a weeknight show in prime time at 10 p.m. in the first such move of its kind on U.S. television.

NBC has said only that it is looking at ways to improve the show's viewership, but by Thursday night several publications, citing unnamed sources, were reporting that Leno will return to the 11:35 time slot he once dominated and share it with its current occupant, talk show host Conan O'Brien.

NBC has come under mounting pressure from its affiliate stations that have complained of a steep drop in the "lead-in" audience for their 11 p.m. local newscasts from the 10 p.m. hour occupied by "The Jay Leno Show" since September.

Leno himself quipped about the furor on his show Thursday night, saying, "I don't think there is any truth to the rumors. See, it's always been my experience that NBC only cancels you when you're in first place. So we are fine."

Leno ended his 17-year "Tonight Show" run last May under a long-planned transition to replace him with O'Brien, who hosted NBC's "Late Night" show that followed Leno.

Leno has averaged a little over 5 million viewers nightly in the 10 p.m. slot, down from the 6.8 million average for that hour during the previous season when it featured dramas.

PRESSURE FROM AFFILIATES

Still, NBC has said Leno's show is a commercial success because its ratings are in line with what advertisers were promised and the show is cheaper to make than scripted dramas.

"Jay's show has performed exactly as we anticipated on the network," NBC said. "It has, however, presented some issues for our affiliates. Both Jay and the show are committed to working closely with them to find ways to improve the performance."

Late Thursday, the network added a brief statement that it was "committed to keeping Conan O'Brien on NBC."

But the New York Times, among others, reported that Leno and O'Brien were in talks with NBC to share the late-night time slot with Leno hosting the first half-hour segment starting at 11:35 and O'Brien coming on at 12:05 for an hour.

The reports and NBC's statements were triggered by reports from website FTVLive and TMZ.com, and they came only days before NBC was due to showcase new programs and future plans at an annual meeting of television critics in Los Angeles.

In addition to complaints from NBC affiliates, who derive the bulk of their revenues from their local newscasts, Leno's move to prime time has had major ratings consequences for the network's own programming.

NBC ceded its ranking as the most watched network at 11:30 p.m. as Leno's longtime CBS (CBS.N) rival, David Letterman, surpassed O'Brien in the contest for late-night viewers.

CBS's "Late Show with David Letterman" now commands a 65 percent lead over O'Brien's "The Tonight Show" in total viewers, after trailing Leno by 20 percent in late 2008. (Editing by Bob Tourtellotte and Muralikumar Anantharaman)