The NBC host feels he been "badly undermined" by the new set-up, which sees his show cut back, start after midnight and finds him playing second fiddle to Leno.
"Conan uprooted his family, his life and moved to Los Angeles and they have not given him enough time" the friend said. "It is outrageous what they have done to him."
O'Brien's family is extremely upset that the massive lifestyle change they made and the new responsibility O'Brien assumed has been taken so lightly by NBC.
"If they want Leno, let them have him, he's a fading star" said the family friend. "Conan deserves better than this."
Asked about future plans, the friend stated "He has had plenty of offers. That will not be a problem." The friend declined to elaborate.