Contract talks between CBS and David Letterman were so contentious at one point that the network was close to saying bye, bye to its cantankerous late-night star.

In fact, according to a report in this week's Time magazine, the negotiations nearly collapsed when CBS President Leslie Moonves became so exasperated over the demands being made by Letterman's camp that he blurted out at a meeting, "Fine. Let him go!" 

Citing "a source involved with the talks," the magazine quotes Moonves as exclaiming, "I've never had a more difficult negotiation in my entire life!" 

Moonves' momentary willingness to cease negotiations was apparently recognized by Letterman's reps as an expression of the executive's frustration and not as a deal-ender, since Letterman is still weighing a CBS offer, as well as one from ABC. 

But Moonves' off-the-cuff comments are an indication of the bad blood that exists between the gap-toothed funnyman and the network that lured him from NBC in 1993. 

And with the relationship between Letterman and CBS apparently in tatters, it's far from certain that he'll remain with the network, especially now that ABC has been aggressively courting him. 

With Letterman holed up at his Caribbean retreat in St. Bart's for the past 10 days, the TV industry and millions of late-night TV viewers anxiously await his return to the air tonight. 

Some observers expect Letterman to announce a decision on his future as early as today, since he's had more than a week to think about it. But some sources close to the negotiations say that might be wishful thinking. 

And if no announcement is forthcoming today, viewers will be watching closely tonight to see if the mercurial comedian reveals hints of what he plans to do in his opening monologue, his Top 10 List, or in his conversations with guests, who tonight will include Ray Romano, star of the Letterman-produced CBS sitcom Everybody Loves Raymond, and New Jersey Nets star Jason Kidd. 

Among the demands Letterman's people are reportedly making is a guarantee that his production company, Worldwide Pants, would be allowed to produce any future versions of Late Show for as many as 10 years after Letterman retires. CBS is said to be balking at this particular request.

For more news, entertainment and sports coverage, click here for NYPost.com.