Frasier Case

The topic of this assignment is negotiations on the rights of a popular TV-show called Frasier, more precisely, about contract extension after eight seasons of broadcasting.

Negotiations were held between two parties: the National Broadcasting Company (NBC) and film studio and the owner of the show Frasier - Paramount.

The biggest issue during these negotiations was the price per episode and Paramount was insisting on discussions about it, but also there were some appendages which were also price-related. NBC tried to propose ratings-based increases/decreases in calculations for price per episode or some forms of development commitments for production companies, so this whole process could be classified as multiple issues negotiations.

These companies have worked together for almost a decade on this show and the terms of contract were changed for a few times in the past, but this particular treaty is a special case and it should not be treated as a normal repeated negotiation process, since the show has passed its peak performance and the show‟s ratings are in decline. Frasier is still considered as a big hit, and as such, it still attracts a lot of spectators, but people in the industry assess that the end of show is very near (NBC deems that show will have one or maybe two good years, but the third year is likely to be a downfall). This is a known fact for both parties and probably one of the reasons why creators of the show do not want to discuss the length of a new contract (Paramount fixed the length to 3 years). Taking the above into consideration this potential deal should be seen as one-shot negotiations.

There were a lot issues with influence on this deal and both parties had solid reasons for their demands and why they were so rigid in changing their positions. One of them was that walking away from this deal could be a potential disaster for both sides, because best alternative to negotiated agreement (BATNA) for NBC and also for Paramount would be stepping into unknown territory and it could cause a lot of damage. WB could not afford the price that Paramount is asking. During the negotiations, Paramount‟s representatives mentioned a few times ABC‟s interest for the show, but the most likely option was that CBS takes over further broadcasting since CBS and Paramount shared a corporate parent in Viacom.

On the other hand, NBC’s BATNA was to find another comedy that could lure the approximate number of viewers, which also means taking over a show from some competitor. All of these could lead to opening Pandora‟s box and start of bidding war among the networks for shows, which would eventually drastically increase programming cost for all networks.

After thorough analyses, NBC negotiation team realized that current price per episode of $5 million is higher than their break-even point and in order to make some profit the price should go down, so