Frasier Case Analysis Essay

Decent Essays
Theory and Practice of Negotiations

In 2001 negotiations began with NBC and Paramount in order to keep the hit TV Frasier on NBC’s network. Paramount, the studio that produced the show, threatened to move
"Frasier" to CBS, Paramount's sister network, if NBC did not agree to a substantially higher license fee than the one it was currently paying. Both had competing interests and several factors were taken into consideration before the negotiations began. Paramount and Kelsey Grammer (Frasier), who the show was centered around, had personal interest. Both wanted a 3 year extension so that Kelsey could rank in history. Kelsey wanted to be an actor with having a 20 consecutive run in television for the record of
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Paramount’s BATNA was to air the show on CBS in the event that NBC did not agree to a higher licensing fee and extending Frasier for an additional three (3) years.

What is your best estimate of NBC’s reservation price (walk away price)?
Reservation price is the price or point at which you are indifferent between doing the deal and not doing the deal. The reservation price should always reflect the BATNA. The reservation value has nothing to do what with what you hope to pay, what you “should” pay, or what is a “fair” price in the negotiation. In NBC’s case, NBC’s reservation price should be approximately $5.5 million dollars per episode. This represents the current break-even license fee.

What is your best estimate of Paramount’s reservation price (walk away price)?

Since Mark Graboff a former lawyer and a past employee for CBS as CBS’s Business Affairs, he had insight of CBS’s economics. With Mark’s estimation of CBS break-even license fee, the reservation price should be $3million with NBC.

Based on (c) and(d) is there a ZOPA?

Zone of possible agreement or ZOPA, is the common ground between two disputing parties. The ZOPA is critical to the successful outcome of negotiation. Based upon c and d, ZOPA existed. Paramount should be willing to take anything above $3million dollars and NBC should be willing to pay as much as 5. 5 million for Frasier. Aside from ZOPA,
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