TBS's pricey Conan O'Brien experiment is flopping—and is about to get even more expensive.

When the cable network hired Mr. O'Brien for more than $12 million per year in 2010, TBS executives hailed late night as its "next land of opportunity" and Mr. O'Brien as the "building block" to a network-wide revival.

In the nine months since "Conan"'s...