As mentioned, the situation came down to Leno not getting the ratings, affiliates getting upset because it was bringing the news ratings down and Conan's ratings weren't the best either. The executives got the bright idea to move Leno to a 30 min show at 11:35 and bump The Tonight Show to tomorrow, 12:05 am. Those executives told Leno and he asked if Conan was alright with it and the execs assured Leno that Conan would be fine with it. Conan wasn't alright with it and felt that the move would ruin the show so it started the drama. The execs went back to Leno and asked him if Conan walked, would he want the Tonight Show back and he said alright because the network would not let Leno go after his show was canceled.
When Conan started his hosting career, he was on a contract that was renewed every 13 weeks and it was a rocky start. When Leno started on The Tonight Show, he was given 18 months yet Conan only got 7 months before they wanted to replace him with the person he got the job from. Conan was classy about it and stood up for the show while Leno just chalked it up to being how the business worked.