Win - Win for NBC. Even with Leno's salary the show will be much cheaper than a 1 hour drama would be, plus Leno will do 40 some weeks a year, 5 nights per week vs 22 episodes a year for most dramas. Leno will fill the time of 5 weekly dramas with ensemble casts and highly paid writers, sets and locations.
Law and Order costs over $4 million per episode (
www.broadcastingcable.com/article/CA6440109.html), multiply that by 22 episodes per year and you've covered 1 night per week for 22 weeks. Paying Leno $30 million for 5 shows a week, 40 weeks a year is a $$ bonanza for NBC even if his ratings are significantly lower than the competing shows.
When the dramas in the same time slot are in repeats Leno will have new shows. Ratings will climb then increasing the return for NBC.
Plus this keeps Leno off ABC where he was ready to go and where he would have split the Tonight show audience while pulling very little from Letterman's audience.
If only they'd done this in 92 with Letterman vs Leno to replace Carson, they might have kept CBS out of late night completely.