R2. Creating value in negotiation - Chapter 2.pdf

Creating value in negotlation 53 a multiissue

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CREATING VALUE IN NEGOTlATION 53 A MULTI~ISSUE NEGOTIATION In Chapter 1, we looked at a relatively simple, one-issue negotiation that allowed us to begin developing our negotiation frame,:"ork and to answer sorne itnportant questions regarding negotiation strategy. As the Holbrooke negotiation suggests, however, dealmaking is often more complicated than it was in the Hamilton Real Estate case. Effective negotiators need, to prepare to execute complex negotiations that entail multiple issues, complex analysis, and considerable uncer- tainty. The case in this chapter contains many more variables and identifies additional tactics and strategies that should be part of your negotia- tion toolkit. Specifically, we will address questions such as these: How should you prepare for a multi-issu~ negotiation? Should you negoti- ate the easiest issues first, the hardest issues first, or neither? How should you structure your offers? How should you handle sharp dif- ferences in beliefs or expectations regarding the value of the deal? What is the role of compromise in negotiation? What should you do after negotiating an agreement? The following case, entitled "Moms.com," concerns the sale of syn- dication rights for a television programo As in Hamilton Real Estate, you have been assigned the role ofseller and given a packet of back- ground information. How would you approach this negotiation? MOMS.COM 2 You are Terry Schiller, the syndicated sales representative for Hollyville, Inc., a multimedia corporation that specializes in produc- ing television shows and motion pictures. You represent the company in negotiating the sale of syndicated programs to local televi~ion sta- tions. Programs in syndication are typically sold to local stations after having run as regular shows on one of the major networks. While few shows ever make it into syndication, revenue from the sale of syndica- tion rights can be a major component of a producer's revenue. Your firm, Hollyville, has just decided to release its one hundred
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54 ',~~t NEGOTlATION GENIUS episodes of Moms.com J a popular situationcomedy ("sitcom"), to syn- dication this year. The plot of Moms.com revolves around three women who are trying to balance their lives as business executives and moth- ers of teenage children. The show has received strong ratings and ap- peals primari1y to women in the 25-54 age bracket. This makes the show potentially quite valuable, as advertisers are willing to pay a great deal to reach this market. Your current negotiation is focused on the, Chicago market, in which two local stations are potential buyers. WWIN has already , made you an offer., However, WCHI is the more attractive buyer be- cause it has a stronger audience base in the 25-54 age bracket. How much a potential buyer is willing to pay for Moms.com depends on its expected advertising revenue from the show. Expected revenue, in tum, will depend on the ratings that the show receives. You estimate that the show wiIl produce $7 million in net revenue over the life of the five-year contract if ratings fall within
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