R2. Creating value in negotiation - Chapter 2.pdf

Pursuing your ba1na your ba1na is to sell momscom to

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pursuing your BA1NA. Your BA1NA is to sell Moms.com to WWIN; thedeal you have negotiated with that station is worth $3.5 million (you have agreed to six runs per episode with WWIN). If you are to finalize the deal with WCHI in- stead, you must agree on both the licensing fee and the number of runs. Hollyville management has asked you to report back after the negotiation with the agreed-upon terms on both oE these issues and on any other terms of the signed contracto You will be negotiating with Kim Taylor, the general manager ofWCHI. Take sorne time to think about how yóu would approach this ne- gotiation. How would you prepare? Which issue would you discuss first? How would you structure your offer? What information, if any, would you plan to share? What information, if any, would you try to acquire? How would you incorporate the lessons of Chapter 1 into your negotiation strategy? Once you have thought through these questions and others that may occur to you, read ahead as we narrate how your negotiation might have unfolded. MAKING THE DEAL You and Kim met and quickly got down to the business at hand. You suggested that while there were many issues to dis- cuss, licensing fee had the biggest financial impact and should be discussed first. You had thought ahead about WCHI's BA1NA andRV, and felt comfortable making an aggressive first offer. You asked for $9 million and justified this figure. using se- lective precedents involving prior shows you had soldo Kim made it clear that he did not like your offer at all, but he stayed at the tableo The two of you discussed the licensing fee for the next hour. Kim argued that Moms.com would probably receive CREATING VALUE IN NEGOTIATION ratings of 3-4 and that advertising revenues would likely be much lower than the licensing fee you had proposed. You re- sponded that your projections suggested the show would receive higher ratings (5-6). PrÍvately, you were unsure whether Kim was being honest about his projections; it was in his interest to convince you that the show would earn low reveriues in order to justify paying you less. At one point, Kim alluded to the possi- bility of purchasing Juniors from you. Because he seemed to be mentioning his inteJ."est in purchasing Juniors only as a way of softening your demands for Moms.com J you suggested that the Juniors discussion be kept separate. The rest of the negotiation focused on Moms.com. Eventually, you reached an agreement,of $5.5 million for the licensing fee and turned your attention to number of runs. Kim opened aggressively on this issue, but you convinced him that you simply could not accept seven or eight runs; eventually you settled on six runs. In retrospect, any other outcome would have required one of you to make a larger com- promise than the other, whií:h could have soured the relation- ship. Having reached agreement on both issues, you submitted a report to Hollyville management that contained the follow- ing financial analysis: Licensing fee received from WCHI: Revenue adjustment based on six runs: Net
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