FRASIER (A) ANALYSIS
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 a new show in place of Frasier. The case points out that there were reports in the media about 20th Century Fox TV stalling its renegotiations for its sitcom, Dharma & Greg, with ABC, if NBC were to lose Frasier. However, this meant that avenues would open up for networks stealing each other’s TV shows, which in turn, would increase operating costs for all networks. The second option (starting a new show) was not only an expensive, but a time consuming alternative, since new shows take time to build up an audience base (in addition to there being no way to predict its success or failure). What is Paramount’s BATNA?
Paramount’s BATNA was to shop the show to other networks if the renegotiation talks broke down. However, due to the high production costs of Frasier, they were limited to the two networks comprising the ‘Big Three’, ABC and CBS. Among these, CBS had the edge since Paramount and CBS were owned by Viacom. Also, from the case, it appears that ABC would not get involved due to the high price tag involved. NBC was paying about $5 million per episode in license fees. This is estimated to be higher than even their breakeven fee, which means they were making a loss on Frasier. NBC felt that neither ABC nor CBS could match...
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