CBS near deal to renew Letterman through 2012

David Letterman is near a deal to continue reading Top 10 lists on CBS for another three years.

The network is about to re-sign the Emmy-winning talk-show personality to continue hosting "Late Show" until 2011-12, sources said. The agreement will represent a two-year extension on his current contract, which expires in 2010.

The decision to stay the course comes as rival NBC makes dramatic changes to its late-night lineup, moving Jay Leno to 10 p.m. next fall and installing Conan O'Brien behind the "Tonight Show" desk. During his first week on "Tonight," O'Brien bested Letterman in the ratings, though the gap between the shows narrowed as the week progressed.

Letterman, 62, has been with CBS since 1993, when he joined the network after leaving NBC’s "Late Night” (where he was replaced by O'Brien).

Given the economic climate, CBS was able to negotiate a lower license fee with "Late Show" production company Worldwide Pants. Previous agreements gave the host a salary of around $30 million per year. It's not clear if the fee cutback impacts Letterman's salary, or just production costs.

From September to date, Letterman has averaged 3.8 million viewers and a 1.1 adults 18-49 rating. That's up 6% in viewers compared to the same period last year and steady in the adult demo. The host is repped by CAA and attorney Jim Jackoway. CBS declined comment.