Frasier Case Analysis - Group 2 Section A

Rudraditya Bhattacharya
PGP26110

Sonia Singh
PGP25216

Saumya Garg
PGP26166

Vanyasree Paila
PGP26378

Priyajeet Singh
PGP26032

Rahul Kanvinde
PGP26298

Charuvagun S
PGP26207

Q.1. Who are the parties in the Frasier negotiation, what are their interests? How can the various parties influence the negotiation process and its outcome? Answer: The parties in the Frasier negotiation are the National Broadcasting Company (NBC) and Paramount, the owner of the show. While the National Broadcasting Company (NBC) wants to pay under $5 million in order to make a profit on the show, Paramount seemed to be demanding $ 6 million per episode. Paramount came down to $5.5 million later.

Q.2. What is NBC's BATNA? What is Paramount's BATNA? What is your best estimate of their respective reservation prices? Is there a ZOPA? Answer: NBC s BATNA: The fact that Paramount didn t have a BATNA. If they switch networks the show would lose viewership, which will affect the studio as well as the network to which they move. So whatever NBC was offering them was the best deal they can get. And Graboff knew the CBS network pretty well and was pretty sure they wouldn t buy Frasier at such a high cost. Moreover this might kick off a price war that will ruin the networks industry and people might reconsider getting shows from paramount for their bad dealing. Paramount s BATNA: It didn t have one. But they were relying heavily on the fact that Frasier was the flagpole show of NBC. But if they quit NBC, both the parties will suffer, while Paramount will suffer the most. ZOPA: The ZOPA would be something that NBC had offered, the creative bonus offer based on ratings. If Paramount things their show is good enough, they must go for the bonus offer, but try and fix the slot. Slot is important because NBC might later switch slots to bring the ratings down.

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Q.3. How can Value be created in this negotiation, and who is likely to get it? What obstacles might prevent agreement, and how can they be overcome? Answer: Value: The publicity gained has already created value for both the parties, by coming to an amicable agreement, both the parties will gain. If the negotiations fall off, both the parties will suffer dentures. The obstacles are 1) The bad treatment of Frasier crew and show from NBC 2) Paramount taking a very aggressive stand at the outset without considering its BATNA They must resolve these issues/obstacles and start on a fresh page. Q.4. How should Marc Graboff judge success in this negotiation? As president of NBC West Coast, how would you want to compensate Graboff? Answer: For Marc Graboff, success in the negotiation would happen if Frasier stayed with NBC at a price point the company was comfortable with. After much haggling, NBC and Paramount remained approximately $500,000 apart per episode.It is important to understand the background in which the company arrived at this figure. Graboff understood the importance of Frasier to the network, but at the same time did not want to take too big a hit on its revenues. The major attraction from Frasier was its "tent pole" effect which ensured that programmes shown around it also received high viewership. This in itself was good justification for having a show whose break even was lower than the license fee demanded by Paramount. Graboff refused to budge from the $500,000 figure. He employed a number of successful techniques:

I.

II.

In the initial stages of the negotiation, he showed his interest in Frasier by offering a number of pluses, such as offering Paramount a specified bonus, development commitments for Paramount, Grammet Productions and Grub Street productions. He knew when to stall for time. At 8 pm on March 1, he left office and told a surprised Paramount crew when they called that the negotiation would have to be resumed the next day. This gave the other party the impression that the stakes were not all that high for Graboff. It was a daring technique that might force paramount to go for a Take-it-orLeave-it offer, thus sparking off a bidding war.

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III. IV.

He constantly questioned Paramount's BATNA. He was even willing to call their bluff on what they claimed were very attractive offers from rival networks. His negotiating ability stemmed from a deep confidence in his knowledge of the industry and the stakes of each player.

If successful, Graboff can be compensated by the NBC management by asking him to handle the exclusive negotiating periods for The West Wing and Just Shoot me which were due soon. This would be management's reward for him.

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