Cable TV – Role: Peter Stone

Case Overview:

Mayor John Ward, representing the town council of Clayton, Oklahoma, and Mr. Peter Stone, representing MicroCable Inc., are negotiating over the terms of a cable franchise. They negotiate three key issues:

  1. the price the town residents would have to pay for their subscriptions,
  2. the date by which the system should be fully operational (the completion date)
  3. the number of cable channels to be offered.

Neither party is certain about the other’s preferences.

The following are the average conditions of such agreements for a town of the size of Clayton:

  1. 1.Price: from $15 to $45 per month
  2. 2.Completion time:  Varies between 6 and 12 months.
  3. 3.Number of Channels:  Varies from 24 to 48.

The negotiation should not exceed 30 minutes.

Role of Peter Stone

You are Peter Stone. The cable company gives greatest importance to price and the least importance to the number of channels. MicroCable would of course like the highest price and the slowest completion, but you estimate that, though providing more channels involves additional costs, it would ultimately pay off handsomely because more people would buy subscriptions.

In preparing for the negotiation, you recall the experiences you had in negotiations with other town councils. If you let the mayor know that you are much more concerned with price than with speed of completion and that you actually want more channels, you reason, you will have given up all your bargaining chips.

Mayor Ward would, you guess, initially offer a moderately high price but only in return for an extremely early completion date. And, you fear that the Mayor would use the town’s municipal authorities as support. So, you choose to be cagey, and plan to let the Mayor and the town know, early on, that a moderate completion time and a moderate number of channels are hardly conceivable, as this would be too costly.

Your assistant has prepared slides detailing the costs of additional channels. Additional documents show how the installations costs will influence the subscription fee. You will try to negotiate a faster completion date in exchange for a modest price increase. Ultimately, you will appear magnanimous in making a final concession of the maximum number of channels for a last major price increase.

Support Materials: