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Prep Notes+session+3

Schiller is negotiating with Taylor to license the Mom.com show and sell the Juniors program. Schiller's priorities are maximizing the licensing fee per episode ($50k minimum, aiming for $70k), getting most of the fee in the first year, and keeping the number of episodes below 6. Schiller's BATNA is a $2.5M deal with another network. Taylor wants to maximize profit from advertising revenue and pay licensing fees in installments over multiple years. Taylor estimates the show could earn $9.6M on average. Schiller will open with an offer of $10M for both Mom.com and Juniors, justifying it based on the show's potential ratings and

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394 views3 pages

Prep Notes+session+3

Schiller is negotiating with Taylor to license the Mom.com show and sell the Juniors program. Schiller's priorities are maximizing the licensing fee per episode ($50k minimum, aiming for $70k), getting most of the fee in the first year, and keeping the number of episodes below 6. Schiller's BATNA is a $2.5M deal with another network. Taylor wants to maximize profit from advertising revenue and pay licensing fees in installments over multiple years. Taylor estimates the show could earn $9.6M on average. Schiller will open with an offer of $10M for both Mom.com and Juniors, justifying it based on the show's potential ratings and

Uploaded by

Nasir Hussain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Negotiation Exercise: Moms.

com Name:__________________________
Preparation Worksheet
Role: Schiller_______________________

Schiller (Seller) Taylor


PRIORITIZED
INTERESTS #1 Maximize Net value of bargaining agreement by : #1 Maximize profit from show (Advertising revenue – amount paid
 Maximum licensing fee/episode (at least $50k, to Schiller)
anchoring at $70k) since this is the major part of
the value (from calculations done separately)
 Ensure at least 80% of the fee is paid in first year #2 Pay in installments over life of show, instead of up front lump
since a lot of value is eroded by paying in year 2 sum.
and 3.
 Keep runs of episode to 6 or below (not a hard
bargain since only 250-500k lost at max).
#3 Run more shows for higher advertising revenue.
#2 Sell Juniors for at least $1MM (alternate deal from
WXYZ is $10k per episode for 100 episodes).

#3

BATNA Proceed with negotiation with WWIN, who is Buy other show at 6 pm slot
interested in purchasing the program for $2.5MM.

RESERVATION $2.5MM $12.5 MM (based on calculation of 5-6 rating upper bound


PRICE revenue and zero profit. They might be okay with lower
profits since they have to compete with WWIN)
Ratin
g
Rating uppe
lower r Likelihood Lower bound Upper Bound Midpoint

2 3 0.1 $ 6,000,000 $ 8,000,000 $ 7,000,000

3 4 0.1 $ 6,500,000 $ 9,500,000 $ 8,000,000

4 5 0.1 $ 7,000,000 $ 11,000,000 $ 9,000,000

5 6 0.5 $ 7,500,000 $ 12,500,000 $ 10,000,000

6 7 0.2 $ 8,000,000 $ 14,000,000 $ 11,000,000


Total $ 7,300,000 $ 11,900,000 $ 9,600,000
TARGET/ $8MM (This is within range of 5-6 advertising
ASPIRATION revenue range), with Juniors ($1MM). Net
Bargaining value = $5.5MM
WHAT IS YOUR OPENING MOVE? INITIAL STRATEGYAND CONTINGENCY PLANS:
I would start with making an limited time offer for a combo deal for Mom.com and Juniors for $10MM. I would put the justification
of my demands based on the high ratings of the show and it is very likely they will get a 5-6 rating with a 20% chance of 7-8 rating.
With that Taylor can easily make over $10MM for the shows. He is currently coming out of the financial limitations imposed by its
parent company, and WWIN is a strong market position. This deal would help Taylor compete well with WWIN.

During the negotiation, I will be more flexible on the number of runs but I will not be very flexible on the financing cost. I would want
as much of my payment in the first year as possible.

** Fill in the information for your role and make your best guess for the other role.
Open Questions

1. What is your key lesson from Class 2 negotiation exercise – Leckenby?

It is important to understand what the drivers of both parties are. It does not make sense to get into an ego war in a negotiation

and lose more than you gain. It is therefore extremely crucial to understand the rules of the game before starting to play.
2. What is your key lesson from Class 2 negotiation exercise – 3-way organization?

The concept of BATNA can be examined, since each participant has the information he or she needs to calculate the expected

value of various deals. The power of seemingly “weak” players can be enhanced through the creation of blocking coalitions.

When played by several groups at the same time, the comparison of outcomes is effective. The exercise can also be used to

raise questions about the basis for arbitrating multi-party disputes.

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