Meant to post this last week when I first saw it (around 3:15):
Letterman hit the nail on the head. NBC's first mistake was five years ago, in pushing Leno out to ensure Conan would stay. Since Jay did not want to retire, NBC did not want to lose their late night powerhouse, and so finagled a way to keep him. But you can't have both.
As Tom Shales put it:
The feeble-brained executives should have heeded the "I don't care" rule propounded by the great CBS News President Bill Leonard when he had to decide whether Dan Rather or Roger Mudd would succeed Walter Cronkite in the anchor chair of "The CBS Evening News," another vaunted secular pulpit. Leonard had to deal with the reality that whichever one didn't get the job would go to a competing network.
Leonard thought and considered and decided: He didn't care if Roger Mudd went to another network because the damage to CBS ratings would likely be minimal, at least in comparison with the damage that the more glamorous and telegenic Rather could do. So Rather, you might recall, got the job.
As Ingrid Michaelson sings on a song I love (I can't believe I'm using it in this context), "The only way to really know / is to really let it go."