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ANDERSON COOPER 360 DEGREES

Connecting the Dots; Airport Security Breach; NBC Primetime Shake Up; What's Next: Education

Aired January 7, 2010 - 23:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(COMMERCIAL BREAK)

ANDERSON COOPER, CNN HOST: Tonight, President Obama says we failed. He says he's responsible, the buck stops with him. We'll show you what he's doing to fix a system that allowed a terrorist with an underwear bomb on to a U.S.-bound flight on Christmas. But are the changes he's talking about for real or simply designed to make us feel safer?

Also, our first look at the incredible airport security breach that crippled Newark airport. TSA cameras were not recording and missed it. But we have another view; surveillance tape from an airline and what it shows could have deadly implications.

And the breaking news tonight: major news in late night TV and network primetime programming. NBC's Jay Leno at 10:00 p.m. apparently finished, Conan O'Brien at 11:35 done. It was a big money gamble and a big TV disaster. Details ahead.

"First Up" tonight: President Obama explaining how the system designed to keep us safe instead allowed a bomber on board a U.S. airliner even though that same system had all the information needed to stop that guy. Tonight his take on what went wrong and what to do about it.

Umar Farouk Abdulmutallab is in court tomorrow charged with the attempted destruction of Northwest Flight 253 and the attempted murder of nearly 300 people.

The intended murder weapon, two kinds of explosives as you've all seen by now sewn into a pair of underpants, walked straight through airport security in Amsterdam.

Today President Obama touched briefly on the screening system but saved most of his criticism for this. You're looking up there on the wall at the 16 agencies making up the U.S. intelligence community with the director of national intelligence overseeing it all and the National Counterterrorism Center supposed to be coordinating the intelligence. You can imagine how confusing the tangle of agencies is and how tough it must be to coordinate them.

But today the president said they had all the information they needed to stop this plot, but they never actually put it together. He laid out steps to fix the problem. He said he took responsibility for their failures and promised to hold them accountable, explaining why he's not singling anyone out for discipline and warning against overreacting which he says would be a victory for al Qaeda.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Here at home we will strengthen our defenses but we will not succumb to a siege mentality that sacrifices the open society and liberties and values that we cherish as Americans. Because great and proud nations don't hunker down and hide behind walls of suspicion and mistrust.

That is exactly what our adversaries want. And so long as I'm president we will never hand them that victory. We will define the character of our country, not some band of small men intent on killing innocent men, women and children.

(END VIDEO CLIP)

COOPER: Well, let's look at the steps the president laid out to fix what's broken. Joe Johns joins us. Joe, did anything concrete come out of this today?

JOE JOHNS, CNN CORRESPONDENT: Well Anderson, the president laid out four steps; a system-wide fix, if you will, across several agencies.

The first one is kind of mind-boggling if you think about it. He ordered the intelligence community to start identifying who's going to be accountable and responsible for following up on leads involving suspected terrorists. Now, one would think that more than eight years after 9/11 that's already happening. It's a massive job considering how much information the intelligence community gets.

Mr. Obama also ordered beefed up analysis of all the reams of information that come which he would have to have in order to determine which threats are high priority and which are not.

And the president also ordered faster and wider dissemination of intelligence reports involving potential threats to the U.S., pretty simple stuff.

Finally, he ordered an immediate effort to strengthen the criteria the government uses to add people to the so-called terrorist watch lists, especially the most important one, the no-fly list -- Anderson.

COOPER: So Joe, we've been talking a lot about accountability for this incident. The other night we put up the pictures of all the people who touched this thing. We're going to show them again, right now. Did anyone step up and take a hit today?

JOHNS: Well, John Brennan the President's Deputy National Security Adviser said, quote, "I told the president today that I let him down," end quote. But neither Brennan nor anyone else lost their job. The president did talk about that. Let's listen.

(BEGIN VIDEO CLIP) OBAMA: I am less interested in passing out blame than I am in learning from and correcting these mistakes to make us safer for ultimately the buck stops with me. As president I have a solemn responsibility to protect our nation and our people. And when the system fails it is my responsibility.

(END VIDEO CLIP)

COOPER: It was interesting, though, Joe, earlier in the day we've been led to believe that the administration was going to reveal some shocking information about the case. I mean, a lot of us frankly were surprised there weren't any real bombshells in what the president said. Do we know the back story on this?

JOHNS: It was a little curious. Probably the biggest bombshell was that Abdulmutallab had a current U.S. visa but his name was misspelled in the security report which led the State Department to think he didn't have a current U.S. visa. Probably, you know, that was probably the biggest thing of all -- Anderson.

COOPER: All right.

Joe Johns, I appreciate it. It's a fascinating case. We continue to follow it.

We've got a lot more tonight on the security situation in the United States. We're going to look at what happened at Newark airport in a little bit.

But right now, let's talk "Strategy" with senior political analyst David Gergen; and national security analyst and former Bush Homeland Security adviser Frances Townsend; also Paula Newton, who's on the ground in Yemen reporting from where this plot was apparently hatched.

David, the president took personal responsibility for the failure. He went on to say this is not the time for partisanship; it's a time for citizenship. But a lot of the GOP are already coming out against this.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: That lasted about five minutes, didn't it? Listen, I think the one thing he did do was something that Paul Begala on this program just a couple nights ago said he had to do it and that was to take personal responsible for this. Just as John F. Kennedy did after the Bay of Pigs and Ronald Reagan did after the Marines barracks were blown up in Lebanon in the early 1980s. I think that was a step forward.

But to believe that this is going to end the partisanship over this issue I think just doesn't recognize current political realities. Republicans believe deep in their bones that this would not have happened had it not been for a certain complacency or taking their -- people taking their eyes off the ball in terrorism.

Now, in the White House they believe they have been very serious about this. They have disrupted certain plots. They have nipped things in the bud, but it might have been much more disastrous than even this plane going down, had that happened.

But they're not going to get much credit for it from their opponents. Their opponents believe that they have not -- that they have been fairly relaxed about it, that they don't recognize the seriousness of it. And that even now there's a question about whether they're really serious about going after al Qaeda in Yemen and some of the other places, in Somalia it's now starting to pop-up.

COOPER: Fran, you worked in Homeland Security under the Bush administration. I mean, do you buy that? Do you believe that's true? I mean, is there something -- are a lot of these things sort of political that changes from administration to administration or a lot of the problems that existed now which have -- the president says he's trying to fix today, did they exist years ago and we just didn't know about them?

FRANCES FRAGOS TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Well, Anderson, you know what, it's a little bit of both. I mean, there was -- I had been concerned as had Secretary Chertoff and others about a creeping sense of complacency. You know you got eight and a half years from 9/11 and keeping the bureaucracy motivated and focused and the American people understanding that we continue to need their -- the government continues to need their support is hard.

And so complacency is an issue and has been an issue.

Someone -- by the same token the administration has made some changes that are concerning across party lines, whether it's when and where and how to deal with the detainees at Guantanamo or whether or not you try individuals in criminal court or military commissions. There have been some changes that are concerning to some people and there has been real debate about it.

On the other hand, Anderson, to your point, some of these changes -- I share Joe Johns' assessment. It's baffling that we would be talking about assigning responsibility for following up on leads.

COOPER: Right, that was kind of stunning.

TOWNSEND: It was certainly stunning to me because after all, we set up the National Counterterrorism Center. They used to carry-on a thing called this threat matrix, the terrorism threat matrix. And they'd go over two or three times a day and for the very reason of making sure leads were being followed, who was assigned to do it and following them until they were closed.

My understanding is they continued to do that. And so the National Counterterrorism Center, Anderson, is and should be doing that today and if they're not I can see why the president would be very frustrated.

COOPER: And Paula, you're there on the ground in Yemen. And Deputy National Security Adviser John Brennan said that they had fragments of information about plots against the U.S. which originated from the Arabian Peninsula but failed to, in his words and I quote, "Understand the intelligence we had ahead of the attack." How badly has the U.S. underestimated the capability of al Qaeda in the Arabian Peninsula?

PAULA NEWTON, CNN INTERNATIONAL SECURITY CORRESPONDENT: Well, they were very blunt about saying, look, Abdulmutallab was a game changer. He was the breakout operative that was able to take that aspirational threat of trying to hit the United States to actually making it a real threat. And that is what has changed everything on the ground here in Yemen but also for the Obama administration.

You know, to give the administration a little bit of credit, I've been tracking officials that have been coming to Yemen now for months and months. It has been on the radar, Anderson. The problem is no one, as we've been saying, connected the dots and said, look, operationally they now have more operatives, al Qaeda operatives than there are in Afghanistan. They have the capacity to do this.

And more than that -- you know Anderson, this is a place where they're recruiting teenagers every day to al Qaeda and that just failed to show up on the radar.

COOPER: All right. We're going to have more with our panel in a moment.

Let us know what you think at home about what the president said today. Does it make you more confident? Join the live chat right now at AC360.com.

Also tonight, what the TSA cameras didn't show because they weren't recording. Our first look at the security breach that shut down one of the busiest airline terminals in the country, a place they keeping saying is where the 9/11 hijackers, where some of them left from.

And NBC's failed primetime experiment. It's our breaking news tonight. See who may have pushed Jay Leno or at least pushed Conan O'Brien out of his "Tonight Show" slot at 11:30 and what's moving Jay Leno out of 10:00; some major news in the world of late night TV programming.

We'll be right back.

(COMMERCIAL BREAK)

COOPER: "We are at war." President Obama said it plainly today in a speech that began with a mea culpa, segued into a prescription for fixing the problem and wrapped up with this rallying cry.

(BEGIN VIDEO CLIP)

OBAMA: Over the past two weeks we've been reminded, again, of the challenge we face in protecting our country against a foe that is bent on our destruction. And while passions and politics can often obscure the hard work before us, let's be clear about what this moment demands. We are at war. We're at war against al Qaeda. A far-reaching network of violence and hatred that attacked us on 9/11, that killed nearly 3,000 innocent people and that is plotting to strike us again. And we will do whatever it takes to defeat them.

(END VIDEO CLIP)

COOPER: Back to "Strategy Session" with David Gergen, Fran Townsend and Paula Newton.

So Fran, the White House basically officially says look, the incident, they had enough information about this guy, this Nigerian as a likely operative for al Qaeda in the Arabian Peninsula. What's being done or what can be done so that the next Abdulmutallab is caught?

TOWNSEND: Well, the president has laid out the issues, as Joe Johns mentioned, but this is really a question of having the analytic capability, not just at the strategic level. What we heard from John Brennan after the president's speech was that the strategic warning worked.

We understood al Qaeda in the Arabian Peninsula was a threat. What we didn't understand -- we didn't have the tactical analysis to tell us how and when and where they were going to actually launch an attack into the homeland. And so what they're looking at -- is the interesting thing is everybody talked in the lead-up to this day that that capability resides in the National Counterterrorism Center.

And while that's true, the president's after-action report done by John Brennan says that there's capability also in the CIA. And so the CIA analysis also took a hit today and that was unexpected.

COOPER: David, do you think -- I mean, we touched on this a little bit earlier. But I mean, do you think the reaction among Republicans and Democrats, among American citizens, to this has been different than it would have been a few years ago? I mean, President Obama very clearly said, look, this is the time for citizenship, not partisanship.

But it doesn't seem like there was a moment when there was citizenship on this in the reaction. It seemed like it's been an opportunity for sniping on -- from people from all different sides of the aisle.

GERGEN: I think that there's a certain kind of disbelief or maybe cynicism on the part of the public. Now, after all, we've been hearing from the government that they're going to close these gaps now for over eight years. We've been -- we poured a lot of money into this. And we still have a poor system. And then we have the Newark incident which suggests we've got all sorts of problems in the way bureaucracies respond to threats.

And I think what's the surprise today was that -- we've been speculating for some days, Anderson, that this was all about this guy and missing the intelligence on the guy. It turned out the real issue was we didn't pick up on the fact that al Qaeda in Yemen is a much more dangerous force. And to solve it is not just a question of screening or better intelligence, it's a question of how do you stop al Qaeda from recruiting and sending these human missiles into America?

COOPER: Well also, if you stop them in Pakistan and then, ok, they pop up in Yemen, if you stop them in Yemen, then they can pop up in Somalia.

GERGEN: Right.

COOPER: I mean, the fear is that there's always going to be some sort of place for them because it's centered around this idea, which is, you know, so horrific.

Paula, I mean, again, you're on the ground in Yemen. The U.S. is positioning itself as a partner with Yemen in the war on terror against al Qaeda. But the Yemeni government, I mean, they don't even have much control over their own country, right?

NEWTON: Absolutely not. I mean, some of the regions here, the government hasn't even shown up as any kind of a force for years. American officials tell me that in the last few weeks they've been quite impressed really that the government is thinking, "Look, this is a problem for us, too." They feel it could touch the leadership here. Al Qaeda is becoming more of a threat.

And add to that, Anderson, it will be interesting to hear from John Brennan today was that key link to core al Qaeda. I can't tell you how many plots we've all pored over. And the one thing investigators are always looking for, does it have a link to core al Qaeda, not just some Internet chatter?

And for them to really say look, that link is there. They will now be sweeping throughout the world to see how many other offshoots of al Qaeda have that key link to core al Qaeda which will make them so much more lethal and really effective in trying to hit the United States.

COOPER: Paula, very briefly -- and this is probably a stupid question, but we got some e-mails on it -- in the video we're seeing that you've taken, of people are walking around on the streets of Yemen. A lot of people carrying daggers. Is that just a tradition?

NEWTON: Yes.

It is and it goes right back to the tribal roots. Here it is loyalty to tribe that matters and I can tell you people here from al Qaeda being protected by those tribes. The Yemeni government is going to have to deal with those tribes. It's not just, you know, these daggers. Those are ceremonial. And they mean a lot to the Yemeni people in terms of defense.

Anderson, this country's awash with weapons, every one of these houses behind me will have a cache of weapons on them. There's a lot this government is dealing with on its plate. But these people, culturally, again, we've heard it before...

COOPER: Interesting...

NEWTON: ... in Pakistan and Afghanistan, the loyalty is to the tribe.

COOPER: Yes.

NEWTON: Many people now saying, that look, the government needs to deal with those tribes.

COOPER: All right, Paula Newton, stay safe there. David Gergen and Fran Townsend thank you very much.

Up next tonight, the breaking news: Jay Leno reportedly finished in primetime. Conan O'Brien possibly caught in the squeeze. And NBC with egg on its face and a lot less money in their bank account. Details ahead on what's happening.

Later, guess who's rewarding the White House party crashers? You are not going to believe who is paying the Salahis, these two people, to show up at their party and how much they're going to get paid. It's going to make your, well, it might make you annoyed. Find out tonight.

(COMMERCIAL BREAK)

COOPER: Breaking news tonight: the multibillion dollar gamble that sent Jay Leno from late night to primetime and Conan O'Brien from New York to Los Angeles is apparently over. NBC looks to be folding its hand, reshuffling the deck and apparently licking its wounds.

It's been a little less than four months since Jay Leno moved to 10:00 p.m. and Conan O'Brien took over the "Tonight Show." NBC reportedly is planning to move Jay Leno back and shove Conan later. The "New York Times" Bill Carter has the story up in the Time's site this evening and likely a front page tomorrow. he joins us now by phone.

Bill, I know you've been working your sources all night. What is the latest you're hearing about how solid this plan is and what's the plan?

BILL CARTER, "THE NEW YORK TIMES" (via telephone): It's pretty solid. I think the only remaining issue is I guess the contractual problems that might come up with this rearrangement. But the parties have been talked to and it looks like they've all agreed that this is going to happen. That Jay will move back to 11:30 but in a half-hour version and that Conan will slide back half an hour and he'll continue to do an hour-long show.

Interestingly his show will be called the "Tonight Show," not Jay's show but Jay will have the show at 11:30.

COOPER: So it will be Jay Leno from 11:30 to 12:00 or there roughly speaking... CARTER: Yes.

COOPER: And then Conan O'Brien from 12:00 to 1:00. And then, what happens to Jimmy Fallon?

CARTER: He just moves back. He's going to start at 1:00. I mean, I don't think this is anywhere a reflection on Fallon who I know the network is very high on. I think this was them attempting to solve two issues which was the fact that their primetime 10:00 show was just not performing and was hurting their late local news.

And the "Tonight Show" the 11:30 show had started to lose badly to David Letterman and CBS. So Jay consistently beat Dave when he was at 11:30. So I think this is an attempt for them to fix that problem, too.

COOPER: Wasn't the whole reason that -- I mean, they moved Conan O'Brien -- they gave Conan O'Brien Jay Leno's job even though Jay Leno was doing great in the ratings because they felt years ago they had to make some sort of a deal with Jay Leno -- with Conan O'Brien otherwise he would leave the network. Is that correct?

CARTER: That's correct. Five years ago he would have probably gone to ABC; he had offers from ABC and Fox. And they didn't want that to happen because they believed firmly that Conan O'Brien was the future of late night. So they made a very unusual deal creating a lame-duck situation with Jay. And I think they expected five years later maybe Jay wouldn't be dominating at 11:30 but he still was.

So then, they faced the question of about whether or not they should go through with it at the time. And then they decided to go through with it only because they figured out another way to keep Jay. All along part of the main -- I guess really the focus of their strategy was don't let one of these guys go to another network the way Letterman did and create a franchise that eats into our late night franchise.

So they made a series of decisions to prevent that. But it looks like all of them have come to naught and they're back to where they were.

COOPER: Yes and this is a major shakeup in late night programming. There's a lot more on this.

Bill Carter, you've been working on it for hours. I appreciate you taking the time to talk to us...

CARTER: Right.

COOPER: ... to get us up to the minute. Thanks a lot, Bill.

CARTER: Ok. Bye.

COOPER: We're going to have more on this later in the program. We're also going to hear from media writer Ken Auletta. Let's check on some of the other important stories that we're following right now. Erica Hill has a "360 News and Business Bulletin" -- Erica.

ERICA HILL, CNN CORRESPONDENT: Anderson, 52 below. That is what it felt like in some areas of the country today thanks to the wind chill. Heavy snow and dangerously low temperatures continuing to blast much of the Midwest, snow and ice caused hundreds of cancellations at Chicago's O'Hare International Airport.

Look at that bus, just wild. Frigid weather is also gripping the south where at least seven deaths are blamed on the severe winter weather. Record low temperatures forecast for two-thirds of the country now. The deep freeze is expected to continue through the weekend.

In Missouri a gunman opened fire at a St. Louis manufacturing plant killing three people and himself and wounding five others. Police say the shooter was a plant employee who is part of a group that had sued the company over retirement benefits. And a trial began this week.

The number of people claiming first time unemployment benefits barely rose last week and the four-week average of claims fell for the 18th straight week signaling layoffs may be easing.

And Operation Chihuahua off to a smooth start; yes, that's the real name. It's not a joke. Aren't they sweet? 15 Chihuahuas arriving at New York's JFK International Airport to begin new lives; they traveled first class as they should on Virgin America from San Francisco. It turns out many of the tiny dogs have been abandoned at shelters there.

In New York, the demand for Chihuahuas is greater; supply, though, lower. So the ASPCA arranged the airlift and will help find the little guys loving homes.

COOPER: Oh.

HILL: Do you need another dog?

COOPER: I don't...

HILL: I don't need one either. They're very sweet...

COOPER: They're very sweet though, yes.

HILL: ... but no, I'm with you one is enough.

COOPER: I hope they find homes soon.

HILL: Yes.

COOPER: Still ahead, the Newark Airport security blunder: what TSA cameras failed to record but other cameras did. A kiss that shut down the airport; we'll show you exactly what happened. And what it means for airport security in general.

Plus, our series "What's Next" turns to the classroom: what does the future hold for today's students? Well, it kind of depends on who you ask.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I'm going to be a lawyer, a doctor and a scientist and an inventor. And I'm going to make a hovercraft vehicle when I grow up.

(END VIDEO CLIP)

COOPER: I would totally buy a hovercraft vehicle. He's got big dreams. So how do educators help his dreams become reality? I'll talk to Washington, D.C. school chancellor Michelle Rhee about her ground breaking work.

(COMMERCIAL BREAK)

COOPER: Tonight, a "360 Follow" on Sunday's huge security breach that shut down part of Newark airport for hours, left thousands of travelers stranded. This iReport video shows you the chaos after a guy slipped through a security checkpoint that was supposed to be guarded.

Now, we've been telling you how TSA cameras were not recording at the time of the breach which is kind of unbelievable in and of itself. But another tape exists from Continental Airlines surveillance footage. And tonight we have it for you.

As you'll see with each frame it reveals how easy it was for this intruder to enter secure area.

Randi Kaye has been studying the video. She joins us now. All right Randi, take us through what we know, what we see happening.

RANDI KAYE, CNN CORRESPONDENT: This guy really created a lot of problems not just for himself and for Newark Airport but for really all over the country.

It all happened Sunday night at Newark Airport. Started here at Terminal C at this checkpoint right there and it happened about 5:30.

COOPER: This is basically right -- this is where all the gates are for the various...

KAYE: Right.

COOPER: ... to get off a plane. This is the gate we're talking about.

KAYE: This is where the passengers would come and exit. Exactly. Exactly.

But as a result of this thousands of people at Newark Airport had to be re-screened. Flights were grounded all over the country and the airport, itself, was closed for about six hours.

Let me tell you here on the video what we're seeing because this is the really important part. If you take a look at this video, there's the TSA guard. Ok? You could see that he walks over. The guy...

COOPER: That's him right here?

KAYE: Right and the guy in question is right there in the beige jacket; a little tough to see. This is him about one minute into the tape.

COOPER: He's the guy over here?

KAYE: Right, in the beige jacket. He goes and says to him, "Hey, move back." So the guy does move back and he seems to sort of hang around for a little while, while he watches the passengers actually exit.

About four minutes later actually the TSA guard -- watch this, watch what happens. Get rid of this one. This is four minutes later. Look what's happening here. The TSA guard just gets up...

COOPER: This is him right here getting up?

KAYE: Right. Leaves his post.

COOPER: Right.

KAYE: This is new to us. We did not know this before. We knew that he had missed the security and missed the breach, but this is him actually leaving the post. We know he was gone for about 90 seconds.

Watch what happens when he's gone. Here we go. The guy in question still unidentified and not found...

COOPER: So this is the guy right here still?

KAYE: Right. The guard's gone. You can see the desk is clear. He's making his way up here toward the desk. That's him. He was ten feet -- actually it looks like he looks back to see if anybody's watching.

This woman here in white, she seems to be a passenger coming from the other direction. He recognizes her and actually ducks under that barrier. Greets her, seems to kiss her hello. Eight seconds later, arm in arm, hand in hand, the two of them are gone. The guy was never seen again.

COOPER: It was actually a passenger who saw this guy duck under and reported the breach, right?

KAYE: Right. The TSA guard, as you know, was not there. He missed it.

Once it was reported the TSA actually went to their cameras -- their security cameras in this area at Terminal C; turns out those cameras were not recording, as you know.

COOPER: Right.

KAYE: And then they had to go to Continental Airlines to get the video; their cameras were recording. They're based here at Newark Airport.

And then TSA apparently didn't even tell the airport police and the port authority for another hour and a half. This guy had plenty of time to leave the airport.

TSA obviously did not release this tape to us. We actually got it from New Jersey Senator Frank Lautenberg's office who wanted us to know exactly what happened. If you look at this video, now we know.

COOPER: So what does the TSA say about this?

KAYE: They actually released a statement tonight and I'll share that with you. "The surveillance video from Newark Liberty Airport clearly shows that a TSA officer's actions led to the Sunday incident. We will use this hard lesson to reinforce the sharp focus and tight discipline at all our stations across the country and ensure we maintain the public trust."

COOPER: All right. Randi, thanks very much. Appreciate it.

A note about last night's program. In a report about the ongoing health care negotiations I said that Vermont Senator Bernie Sanders received $10 billion for community health centers in his state. That's not true. I misspoke. The money is for community health centers across the country. I regret the error.

Up next tonight, the latest in our breaking news about Jay Leno's possible return to late night. What it means for Leno, Conan O'Brien and NBC. We'll talk to Ken Auletta and take a close up look.

And later, payday for the White House party crashers -- unbelievable. They are cashing in on their dubious celebrity, being paid to go to a party. I'll tell you who would dare pay these people and if there's any way to stop it.

(COMMERCIAL BREAK)

COOPER: We want to get back to our breaking story involving NBC's two kings of comedy, Jay Leno and Conan O'Brien. As we told you a few moments ago "The New York Times" this evening says NBC is moving Leno back to late night where he's going to host a show at 11:35 p.m. only for half an hour, though. "The Times" says Conan will then be pushed back to 12:05 followed by Jimmy Fallon an hour later.

"The Times" adds that NBC executives have not yet made a final decision on the plan, but if it's true, it marks a stunning reversal at "30 Rock" which last year in a massive media blitz gave Leno his own 10:00 p.m. primetime show. It was a calculated move; a money- saving one. But the ratings for Leno and Conan plummeting, their network reportedly pulled the plug on what some are calling a colossal mistake.

NBC issued a statement this afternoon, saying, quote, "Jay Leno is one of the most compelling entertainers in the world today. As we have said all along, Jay's show has performed exactly as we anticipated on the network. 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."

In a separate statement, NBC said, "We have the best comedy team in the business. We remain committed to keeping Conan O'Brien on NBC. He's a valued part of our late night lineup as he has been for more than 16 years and is one of the most respected entertainers on television."

Very carefully-worded statements you notice for what many see as a costly failure.

Up close tonight, here's Tom Foreman.

(BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT: Leno's September move was nothing short of seismic for network TV. In an instant he was moved from his proven base of power, 5 million viewers in late night to turn NBC's final hour of primetime every evening to talk.

JAY LENO, NBC HOST, "THE JAY LENO SHOW": I am thrilled to have you as my very first guest.

JERRY SEINFELD, COMEDIAN: Well, thank you. Thank you very much.

FOREMAN: NBC thought it might reap a windfall. Talk shows are cheaper to produce than dramas. Leno could and did draw a steady stream of big names and with a larger audience at that hour, big profits could follow.

But "L.A. Times" TV critic Mary McNamara says after a huge debut Leno nose dived to last place.

MARY MCNAMARA, TV CRITIC, "L.A. TIMES": Yes, I mean, what did he fall from? 18 million tuned in for the first and I think he dropped to, what, I don't know; 7 million or something within a couple of weeks. It was pretty staggering.

FOREMAN: Other networks smelled blood as popular shows and new arrivals surpassed Leno's ratings. Soon local TV stations across the country were nervously suggesting Leno was not leading enough viewers into their late newscast, hurting their ratings and profits.

MCNAMARA: Every single network has had one or two like really solid shows emerge and there sits, you know, NBC with egg on its face.

FOREMAN: If that were not bad enough...

UNIDENTIFIED MALE: It's "The Tonight Show with Conan O'Brien". FOREMAN: ... Leno's replacement, Conan O'Brien was supposed to lead the legendary "Tonight Show" into a new decade of glory. But instead, he stumbled, losing half of Leno's former audience.

CONAN O'BRIEN, NBC HOST, "THE TONIGHT SHOW": I hit my head so hard that for 5 seconds I actually understood the plot I've lost.

FOREMAN: And in an almost Shakespearean twist, the late night entertainment winner has become a man who was passed over for "The Tonight Show" job years ago, David Letterman on CBS.

UNIDENTIFIED MALE: It's "The Late Show" with David...

FOREMAN: Letterman used to chase Leno in the ratings. But now despite even a sex scandal he is pulling up to 2 million more viewers than Conan on any given night.

DAVID LETTERMAN, CBS HOST, "THE LATE SHOW": Now, my response to that is, yes, I have.

FOREMAN: So for NBC, the expected win/win/win has become a lose/lose/lose. And in the high-stakes world of television that usually means call the moving vans.

Tom Foreman, CNN, Washington.

(END VIDEOTAPE)

COOPER: Well, let's dig deeper. Joining me, Ken Auletta, who's the media writer for "The New Yorker" and the author of the new book "Googled: the end of the world as we know it".

Ken, Jay Leno famously said back in 1993, the height of the frenzy over the future of "The Tonight Show" back then, he said NBC stands for never believe your contract. It's kind of amazing that he finds himself and maybe Conan O'Brien finds himself in the same situation. Were you surprised to hear all this?

KEN AULETTA, AUTHOR, "GOOGLED": Stunned.

COOPER: Stunned?

AULETTA: For a network to have put as much effort and promise into moving Leno to 10:00 and replacing him with Conan O'Brien and then after half a season to potentially cancel it, which it appears that they may do, which may also mean canceling Conan O'Brien, I mean, that's like shooting yourself in the mouth.

COOPER: How could NBC possibly spin that? I mean, will they just -- do you think admit this whole thing was a big mistake?

COOPER: I don't know how they -- they don't admit that in effect. They won't say that. They'll say this is a great move and we're making money, which they've been saying. They said today that "we have achieved our goals with Jay Leno". If you believe that, I have a bridge I'd like to sell you. COOPER: They say essentially, well, look, the ratings for his show are kind of what we expected and because it's a cheaper show to produce than these expensive 10:00 hour-long dramas, you know, we're saving money.

But the flip side of that is it's decimating local stations' newscasts which come on after the Leno show at 11:00 and they're losing a ton of money, right?

AULETTA: They're not only losing a ton of money on the local stations, which their chief moneymaker is 11:00 news. But it means that the lead-in for Conan O'Brien's show at 11:30 is weaker because the news ratings are down for the 11:00 news which explains why Conan O'Brien is 2 million viewers behind Letterman now, when, in fact, Leno was beating Letterman.

COOPER: How did they get into this position where -- I mean Jay Leno was doing really well in the ratings when he was on "The Tonight Show" at 11:30. He was beating David Letterman. Why did they take him off the air and put Conan O'Brien? It was some sort of a deal that they made with Conan O'Brien years ago, right?

AULETTA: It was. And they thought that Conan O'Brien appealed to a younger audience and was a hip guy and funny guy with a different sense of humor; a more quirky sense of humor. They thought that would broaden the appeal of "The Tonight Show" particularly to a younger audience that was more Internet savvy, et cetera. It hasn't worked out so far.

You have to give time to these things but apparently they're not going to give it time. And one of the interesting questions here, Anderson, you have a new owner coming in, ComCast of NBC. One of the things that ComCast is interested in is content. Content that is repeated on many different platforms.

One of the problems with the 10:00 Leno show, it's not repeatable. They don't repeat very well. Programs like "ER" do repeat very well. So I would think that the new owners of NBC might not be very happy about this.

It's a fascinating development, as you said stunning. Ken Auletta, appreciate you being on, thanks.

AULETTA: My pleasure.

COOPER: Ahead tonight, what's next in education?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The thing that maybe I would like to change is maybe have lunch a little quicker because we have to have it at, like, 12:00.

(END VIDEO CLIP)

COOPER: I'd like to have lunch quicker, too. Harry's right. Second grader Harry would like an earlier lunch. We're going to talk to Michelle Rhee, chancellor of D.C. public schools, about the challenges and changes that she's making and what's ahead for kids across America.

Then what's not to teach your children. Two young girls apparently hold up a bank. Wait until you hear how young one of the suspects may be when we continue.

(COMMERCIAL BREAK)

COOPER: All this week we're looking at "What's Next?" in a series of interviews with innovators and trail blazers. Tonight we turn to what's arguably the most fundamental starting point for innovation: Education.

When we were brainstorming guests for this interview, Michelle Rhee immediately came to mind. As chancellor of Washington, D.C. troubled school system she's been fearless when it comes to shaking up the status quo.

I talked with her earlier.

(BEGIN VIDEOTAPE)

COOPER: Michelle, in terms of what's next in terms of education, where do you see classrooms being 20 years from now? What's working now that you want to see more of?

MICHELLE RHEE, CHANCELLOR, WASHINGTON D.C. PUBLIC SCHOOLS: I think one of the things we're going to see over the next few years is a real focus on teacher quality and human capital in schools.

One of the things that people talk about a lot is the fact that you can have great school buildings, you can have lots of technology and computers in the classroom, but all of that doesn't matter at the end of the day unless you have a great teacher in front of every single child in every single classroom in America.

COOPER: Does that mean higher salaries for teachers? Does that mean more accountability for teachers, that they can actually be fired if they're not performing?

RHEE: It's both. I think, one, we have to get teachers to a level of compensation that puts them on par with doctors, lawyers, investment bankers and the most respected professions in the country. But on the flip side of that, the only way that that's going to happen is if we can hold teachers accountable in the same way that we do other professionals.

And so that does mean that if you're a truly effective teacher you're going to get paid a whole lot more money and that if you're ineffective that you will be removed from the classroom.

COOPER: I want to show you or play you something that a student, Leara Ali, a 12th grader from New York said when we asked her what she would change about her school. LEARA ALI, STUDENT: The teachers, because a lot of kids complain about the teachers and like the older teachers are -- like they need to be replaced at a certain time and they don't realize that. They just keep them in because of the connections that they have.

COOPER: How much of a problem is that? Whether it's connections or union? How much of a difficulty is it not being able to hire and fire people as you would in a corporation?

RHEE: It is a significant problem that in this country right now we have a dynamic where you can be incredibly ineffective, you can actually, you know, take kids backwards in terms of their academic gains every year, year in and year out and still have a job.

And as long as we have those protections in place, we're going to continue to have the problems in the public education system in this country that we do today.

COOPER: We asked another student, Lauren Alford, she's a ninth grade student from Atlanta what she would change about school. Here's what she had to say.

LAUREN ALFORD, STUDENT: I would definitely first say make sure all of the students have like technology is becoming like one of the things very important to students now, since, I guess, like we're moving forward in technology. So to make sure we have computers that are working.

COOPER: What do you see -- I mean the next revolution in education? Like computers have been over the course of the last 25 years?

RHEE: I actually don't think it's going to be something in the realm of technology, computers, or smart boards or anything like that. Those can all be supports and resources in the classroom, but I think the real innovation is going to happen around accountability for the adults in the system, and again, as I said earlier, with the focus on human capital.

I think that that -- how we change the way that teachers are thought about in society, how they're compensated, how they're evaluated, that's really what's going to drive the innovation going forward.

COOPER: What about year-round school?

RHEE: I think we have to think about all of the resources that we have at our fingertips when we're talking about improving the educational outcomes for kids, so I absolutely think that we need to think about moving towards year-round school, but it's incredibly costly and it is something that we would have to work out with the teacher union and contracts.

COOPER: There's so many scary statistics out there. The U.S. is ranked 25th out of 30 industrial countries in Math, 24 out of 30 in Science. It's terrifying and it feels like we've been talking about this for a long time and yet we don't really hear creative solutions. It doesn't seem like there's an answer. Is there an answer? Do we know what the answer is?

RHEE: It's absolutely the human capital. It's the quality of educators we have in the classroom and leading our schools. In order to implement the solutions that are necessary, it's going to take a lot of political capital on the parts of our politicians and leaders, and it's going to make some people unhappy.

I think that one of the things that we realized here in Washington, D.C. with our reform efforts is that you have to be willing to withstand a little bit of that opposition and push back. As long as the leaders of school districts and cities are willing to take that on, that's really when we're going to be able to push through.

COOPER: This may seem an unusual question for you, but we've been asking it to every -- all the innovators that we've talked to in our "What's Next" series. What are the three things you can't live without?

RHEE: I can't live without my e-mail, my computer, really good food, and on the professional side I could not live without the boss that backs me every single day, Adrian Fenty.

COOPER: All right. I don't know if that was kissing up to your boss in the last one but I'll let you get away with it.

RHEE: Not at all. He's the most supportive and strongest player on education that you can possible imagine.

COOPER: Michelle Rhee, appreciate your time. Thank you.

(END VIDEOTAPE)

COOPER: You can watch the entire interview with Michelle Rhee on AC360.com.

Our look into the future continues tomorrow. We'll talk with Suze Orman about what's next for your finances and the country's. Tomorrow go -- tomorrow if you want to ask her a question, you should go during the day to 360.com, submit your question on the blog and we'll try to see if we have time to ask it to Suze.

Coming up next, young girls turned bank robbers. Police are on the hunt for two girls, the age of one of them is a shocker. We have the details ahead.

And the Salahis are cashing in on their notoriety; getting paid to attend a party. Find out where and how much and who's going to pay these people, coming up.

(COMMERCIAL BREAK)

COOPER: All right. Let's get caught up in some of the other important stories tonight. Erica Hill has the "360 Bulletin" -- Erica.

ERICA HILL, CNN CORRESPONDENT: Anderson, two security contractors who worked for the company formerly known as Blackwater are now facing murder charges. Today's indictment is linked to the killings of two Afghans in Kabul last spring.

Near Cincinnati, Ohio police are looking for two girls who robbed a bank. They believe one of them is as young as 12. These are snapshots. You can see the surveillance video as that crime took place on Tuesday afternoon.

A tax on high-priced health insurance plans or so-called Cadillac plans very much in play it turns out on Capitol Hill. According to White House aides, President Obama leaned heavily on House Democratic leaders in yesterday's closed-door meeting saying they should include a tax on Cadillac policies in the final version of the health care bill. The Senate favors the tax, the House however has resisted that idea which is opposed as well by many organized labor groups.

On to London now, where Princes William and Harry are said to be pleased with the first official oil portrait showing the two of them. The royal brothers as you can see, in military uniform. And you may notice, artist filled in some of William's already thinning hair. Our astute writers noticed that.

COOPER: Thanks for bringing that up Erica Hill.

HILL: How about that? You have all your hair, Mr. Silver Fox.

COOPER: No, but I mean, that's kind of -- that's not a nice thing to bring up.

HILL: Ok. Somebody else wanted to point out that Harry's nose, which was broken in a rugby match when he was 15 though they didn't change that at all. That portrait on display for you at the National Portrait Gallery for at least six months. Go check it out yourselves and see what you think.

COOPER: All right.

HILL: Plus the couple who crashed the White House state dinner. Yes, Anderson's favorite story of the day, they're being rewarded. Here comes your favorite movie. Ready?

COOPER: They're being rewarded.

HILL: They are. Here you go. "Wait honey, one more picture." There you go. Anderson...

COOPER: There. That's my favorite moment. "Honey, don't go. There's more pictures that can be taken."

HILL: I love that.

Tareq and Michaele Salahi getting paid to party at Pure Nightclub at Caesar's Palace on the Vegas strip. COOPER: I can't believe a hotel is going to pay them money; rewarding them for what they allegedly did.

HILL: And according to "The New York Post" in terms of, about $5,000 in cash in addition to plane tickets, accommodations and dinner.

COOPER: All right.

Hey, that's it for 360. Thanks for watching. I'll see you later tonight.

"LARRY KING" starts now.