Mr. Shandling, the host of HBO's satirical "The Larry Sanders Show," has become a cult hit among Hollywood performers who like the way the show spoofs the industry.
"It's funny," said actor Alec Baldwin during a recent taping of the season's premiere show. "It's different. I enjoy the show within the show. You can't send up the business enough."
Teri Garr, who also appears on the premiere, said, "It's my favorite show. It's Garry Shandling, but it is Larry Sanders. It's not him, but wait a second, it really is him. It is a funny idea."
A source familiar with the negotiations for a replacement for Mr. Letterman when he takes his show to CBS said "look to midweek" for an announcement.
NBC issued a "no comment" Monday following reports that the network is negotiating with Mr. Shandling to replace Mr. Letterman, who leaves NBC June 25.
"We are carefully looking at our options," said NBC West Coast spokeswoman Pat Schultz. The network has announced only that Lorne Michaels, the executive producer of "Saturday Night Live," would be executive producer of the new "Late Night" show.
Haley Sumner, a spokeswoman for Mr. Shandling, also had no comment.
HBO spokesman Richard Licata declined to discuss his company's arrangement with Mr. Shandling. HBO has contracted for 22 half-hour episodes this season. It began production last month and premieres June 2. Mr. Licata would say only, "Garry Shandling is currently presiding over the best and funniest talk show on television for HBO. Why would he want to do another one for someone else?"
Actor Baldwin praised Mr. Shandling's current show. "He really controls the situation around him, passively. It is all very spontaneous, very loose. These guys are ad-libbing left and right. They are maniacs. You have to be careful -- they are very funny, and you might wind up with tread marks."
Mr. Baldwin's younger brother, Daniel, who co-starred in NBC's "Homicide," got a personal request from his real-life neighbor Mr. Shandling, but it came in a typically nebbish fashion.
"He pulled up in his car the other day when I was walking the dog, and in typical Garry fashion, while he was asking me to be on the show, he was on the phone," Daniel Baldwin said. "He said, 'I need a favor from you; hang on.' He comes back to me, 'Your brother Alec is doing the show; hang on.' He comes back. 'I need you on the show; hang on.' Then he comes back and starts to explain. I tell him, 'Garry just tell me what time you want be to be there; I'll do it.'"
In recent weeks, there has been speculation that NBC would hire a relatively unknown comic rather than an established performer.
The network even went so far as holding an informal audition for a group of comics at a Los Angeles comedy club, the Improv. Last week, the name of Conan O'Brien, a 28-year-old stand-up and alumnus of "Saturday Night Live," surfaced. Mr. O'Brien, a producer at Fox's animated "The Simpsons," reportedly did a 40-minute presentation to NBC officials that included a monologue.