FRASIER By Group 3

Introduction

There are 7 questions that must be asked by every person before he or she negotiates. These are called elements of negotiation. They are:

1. BATNAs: What will respective parties do if they don’t come to an agreement?

2. Parties: Who are the real parties in the negotiation?

3. Interests: What are their fundamental needs and priorities?

4. Value: How can value be created and who is likely to get it?

5. Barriers: What obstacles might prevent agreement and how can they be overcome?

6. Power: How can various parties influence the negotiation process and its outcome?

7. Ethics: What is the right thing to do?

BATNA - (Best Alternative to a Negotiated Agreement)

Lose the show

• Buy another show from a different studio ( Dharma & Greg )

• Increase the cost , lose the image of Frasier and the audience, loss of viewership

• Begin with a new show• Take a lot of time, maybe a loss

of image and audience, loss of credibility, fans could be disappointed

Break the deal with NBC

• Sell the show to other networks• Sell to one of the « Big three »• ABC may not buy the show • CBS can be an opportunity due

to the corporate parent Viacom• But even if they have a deal

there could be loss of viewership and audience and the deal may not be as good as earlier

For NBC For Paramount

ZOPA (Zone of Possible Agreement)

The ZOPA could be something that offers creative bonus based on ratings.

Something between $5million and $6million ( max for NBC and the goal of Paramount)

At the end 5.4$ million deal

Paramount decision

ZOPA

NBC decision

Parties

The parties involved for renegotiating the rights to Frasier were

Demanded $8 million per episode

Willing to pay under $5 million per episode

But there were influential players who were not directly visible at the bargaining table

And hence major influencers were the following

But these networks had less viewership and hence they could not afford the price tag

CBS and Paramount shared a corporate parent in Viacom

Paramount kept promising that ABC was interested in the deal.

Interests

NBC

Retain Frasier even by paying more than current license fee

Get a short pick-up for Frasier (<2years) Paramount

Get a prime deal i.e. 20% increase in current fee

Long extension of 3 year pick-up time for Frasier

Value

The publicity gained has already created value for both parties

If they come to an amicable agreement,

both the parties will gain

If the negotiations fall off,

both the parties will suffer due to loss of viewership

Barriers

Institutional Barriers The negotiation period can last only for a

month after the end of contract period as per industry standards

Once a negotiation is rejected by a network, the studio is allowed to offer to another network as a price more favorable than given to the incumbent network

Barriers

Paramount View

• Extension period needs to be for another 3 years so as to fulfill Grammer’s ulterior motives of matching the show Cheers and also tying for the record of “longest-running primetime television character”

NBC View• After learning Grammer’s

intention and confidence for 3 year extension, it was granted and this point was off the table

Barriers Removed Prior Negotiation

• Generally, cost standpoint and ad revenue are the parameters used to judge the competitor price

• In this case, due to Viacom as a shared corporate parent of Paramount and CBS, it got difficult for NBC to judge the price CBS would pay for the show.

Power

Mark Graboff’s intimate knowledge of CBS’s personalities, culture and revenue

Power to provide greater revenue to Viacom than CBS and other networks

Power to renegotiate the show for a bargain due aging and possible decline of Frazier

Loss of viewers for Frazier due to confusion from network switching

Power to make Frazier unappealing for other networks by using the press and media to its advantage

Exclusivity agreement between NBC and Paramount

Ability to retaliate & boycott future contracts with Paramount --> Infeasible for networks to depend only on sister studios

Viacom- common corporate parent of Paramount and CBS

Paramount owned Frazier (NBC had no ownership interest in the show)

Lack of a ‘self-dealing’ clause in the Frazier contract --> Viacom could place Frazier on CBS

Political motivation for CBS to get Frazier on its network

Increasing tension between Paramount (Frazier) and NBC

Power

High ranking- 5th most honored TV series 2nd on NBC season premier & 15th in the Nielsen Media Research’s season-to-date ratings (2000)

Lack of other highly rated and highly viewed comedy shows (NBC’s aging hit show Friends set to end soon)

Appointment viewing from a large upscale audience

‘Tent-pole’ for NBC NBC’s investment in the show for 8 years Tuesday could be a wasteland for NBC without

Frazier thus increasing NBC’s number of wastelands (Monday, Sunday, Saturdays)

Power to end NBC’s leadership in prime time

Power to exacerbate the tension between NBC and Paramount

Ability to create confusion

51% of total viewership (1997) from 40% in 1992

Cable networks & upstart broadcast

networks

Ethics

The last element in a negotiation is ethics where the question to be asked is “what is the right thing to do?”Negotiators must address 5 categories under ethics in order to act responsibly. These are candor, fairness, force, impact on bystanders and principal agent conflicts.

For NBC we see that after analyzing extensively they conclude that they were willing to pay a higher license fee to Paramount which ABC would not

Also since Graboff knew the inside story of CBS too, they would also not make a payment as huge as $8million to Paramount.

On the other hand, Paramount was confidently flaunting ABC’s willing to make higher payment for Frasier which had little chances of materializing. Hence they were bluffing to build negotiation power.