Xyz Analysis Essay

Decent Essays
This case outlines the background of the negotiations between NBC (National Broadcasting Corporation) and Paramount for the extension of renegotiating the rights to the TV show, Frasier. While NBC wanted to pay under $5 million per episode in order to make a profit, Paramount seemed to be demanding $8 million per episode. This was a very big gap considering that there were 24 episodes per season and that Paramount wanted a three year term on the renegotiated contracted. The key parties in this case are NBC (represented by Mark Graboff, Scott Sassa and Jeff Zucker) and Paramount (represented by Kerry McCluggage and Gary Hart).
What is NBC’s BATNA?
NBC’s BATNA was to either steal a show from another network or begin
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Since Paramount could not negotiate for a price lower than $5 million with other networks, Viacom probably would not agree to a loss making deal unless it felt that Frasier would have a significant impact on other CBS shows (in other words, be a ‘tent pole’) as well as on CBS’ internal power struggle.

What is your best estimate of their respective reservation prices (“walk away price”)? Be sure and explain your answer. Don’t just give a number.
The initial offer from Paramount was a 20% increase over what NBC was paying. This translates to roughly about $6 million per episode. However, NBC’s initial number was 5% less than what they were paying currently. This translates to roughly about $4.75 million per episode. Later, Paramount came down by $500,000 per episode ($5.5 million per episode). This still represented a sizable difference.
Based on these facts, I would put Paramount’s reservation price being in the range of $5-$5.25 million per episode. This is because their BATNA is not very strong and the fact that NBC were the industry leaders in terms of license fees, especially for prime-time shows. Additionally, they called NBC to still work on the deal, which gives a strong hint that they were still open to negotiation. On the other hand, NBC’s reservation price would be in the range of $5.5-$5.75 million. Though NBC’s BATNA is also not very strong, they have other alternatives. And
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