The "cable dispute" between CBS and Time Warner shows that "hardball" negotiation tactics are usually ineffective.
The threat of punishment often appears as the only way to secure concessions in contentious negotiations. But such "hardball" negotiation tactics - or "kamikaze" tactics as I call them, because both sides maneuver themselves into a negative downward spiral where, in the end, often the only goal is to inflict more damage on the other side than you take on yourself - fuel disputes and drive the negotiating parties even further apart.
On October 31, 2013, The New York Times reported that Time Warner Cable suffered a huge quarterly loss in television subscribers -- the largest in its history: 306,000 of its 11.7 million subscribers canceled their subscriptions. This was due to a standoff in fee negotiations the company was in with CBS. In the summer of 2013, as a result of the deadlock in negotiations, Time Warner cut cable from millions of homes in New York, Los Angeles and Dallas. A total "blackout".
The two companies then sought a dispute settlement agreement. At the end of the process, CBS felt like a winner: The company was able to organize the programming in the above-mentioned Major cities enforce significantly higher fees (from around $1 per subscriber to $2 per subscriber) and have been granted the right to sell their content to web-based intermediaries such as e.g. B. Netflix for sale.
Time Warner halted the blackout and conceded defeat, fearing another mass subscriber churn as the dispute would have disrupted CBS's broadcast of Monday Night's football game.
This business negotiation underscores the great leverage that content providers have in disputes with distribution companies. Time Warner Company's decline in subscribers puts the company in a weaker negotiating position going forward. Any operator who deals with Time Warner in the future knows not only that CBS won the battle, but also that the company emerged from the dispute weakened.
Be careful with punishments at the negotiating table
The negotiation between Time Warner and CBS also shows why attempts at punishment often lead to setbacks of their own. Time Warner wanted to intimidate CBS with the blackout and make it cave in. Blinded by the damage Time Warner wanted to do to CBS, the company ignored the fact that it would be hit just as badly.
The use of this kamikaze technique not only resulted in Time Warner losing a negotiation, but also permanently weakened the company's reputation and its own position of power in future, similar negotiations. So if you do negotiate with Time Warner yourself, don't be put off by attempts at punishment and threats - the sword has become dull ;)
ISMAN & Partner is a management consultancy that supports national and international corporations, medium-sized companies and start-ups, organizations and institutions in complex negotiation and conflict resolution processes. Founded in 2015 by Calin-Mihai Isman, the experts for negotiation & mediation support managers and employees from the areas of sales, purchasing, M&A, contracting, HR or IT.
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