UPDATE 3-Jay Leno takes his act to prime-time TV

(Adds salary details)

By Steve Gorman and Jill Serjeant

LOS ANGELES, Dec 9 (Reuters) - Comic Jay Leno will launch his own nightly talk show in prime time next year in a landmark television deal that keeps him from moving to a rival network after his planned departure as host of "The Tonight Show," NBC said on Tuesday.

The new one-hour show, tentatively titled "The Jay Leno Show," will air at 10 p.m. and become the first program of its type to run five nights a week in U.S. prime time, breaking with the programming model long used by NBC and other commercial broadcast networks for the most lucrative hours of TV advertising.

Financial terms of Leno's new NBC deal were not disclosed but he is expected to command an annual salary close to $30 million.

The deal comes as executives at the struggling network, a unit of General Electric Co-controlled (GE.N) media company NBC Universal, are seeking to revamp their business to cope with major industry upheavals brought by new digital technology.

In addition, NBC officials worried that Leno, who has long reigned supreme in the late-night TV ratings war, would jump to a competing network and take "Tonight Show" viewers with him.

"We are looking to change how broadcast television works in this new media landscape and we were looking to keep Jay Leno in the family. With this we have accomplished both," said Marc Graboff, co-chairman of NBC Entertainment.

"It just seemed like the time was right for this," Leno, 58, told the same news conference. "After 17 years of being on 'The Tonight Show,' it's fun to try something different."

Leno's future had been in question since NBC surprised the TV industry four years ago by announcing he would bow out from "Tonight" in May 2009, to be replaced by Conan O'Brien, 45, who currently hosts NBC's "Late Night" show that follows Leno.

Leno was widely reported to have been privately unhappy with stepping down and rival networks including Walt Disney Co's (DIS.N) ABC were said to be circling the late-night star.

'DISGRUNTLED' LENO

"There were reports that I was going to ABC, but that was started by a disgruntled employee -- me," Leno joked.

Leno ranks as America's favorite late-night host, averaging 4.8 million viewers this season, and regularly bests CBS rival David Letterman. But his audience pales compared with TV fans tuning into hit scripted prime-time comedies or dramas.

Graboff said NBC did not expect Leno to command much more of an audience in prime time than he has in late night.

But the topicality of a nightly show, built as it is around news and events of the day, would appeal to advertisers because viewers are more likely to watch in real time rather than taping with a digital video recorder (DVR) to watch later.

"It's somewhat DVR-proof," Graboff said of the format.

An added benefit, he said, is that a full week of a program like "The Tonight Show" costs about as much to produce as one episode of a typical prime-time drama. Moreover, NBC plans to air at least 46 weeks of original Leno shows, compared with the typical 22 weeks for first-run prime-time series.

By effectively reducing the number of prime-time hours NBC needs to fill from 22 to 17 a week, Leno's show allows the network to focus more resources on developing and promoting other shows, executives said. NBC currently lags in fourth place behind its three major rivals in prime-time ratings.

The program will launch in the fall of 2009 and feature many elements familiar to his late-night viewers, including an opening monologue and comedy segments like "Headlines" and "Jaywalking," he said.

Leno said the show would still be taped before a live audience and would likely include more newsmaker interviews, but the exact format was still being worked out. He also plans to keep his production team intact. (Editing by Bob Tourtellotte, Cynthia Osterman)