In negotiation and disputes, punishment and threats often seem like the only way to win concessions. But business negotiators would do well to remember how Time Warner’s gambit unfolded. Rather than spurring agreement, such hardball tactics tend to escalate disputes and drive parties even farther apart.
For example, back on Oct. 31, 2013, Time Warner Cable reported a huge quarterly loss of television subscribers, the largest in its history: 306,000 of its 11.7 million subscribers dropped the company, the New York Times reported.
The bad news had been attributed largely to an impasse with television network CBS over fees, which led to Time Warner blacking CBS out of millions of homes in New York, Los Angeles, and Dallas for a month that summer. A dispute resolution agreement reached by the two parties was viewed as a victory for CBS, which had sought—and won—a promise of significantly higher fees for its programming in the blacked-out cities, from about $1 per subscriber to $2, as well as the digital rights to sell its content to Web-based distributors such as Netflix.
Time Warner halted the blackout and conceded when it did in large part because it feared a mass exodus of subscribers if the dispute interrupted the start of Monday night football on CBS.
This business negotiation underscores the significant leverage that content providers have in disputes with distributors. The drop in Time Warner subscribers is “bad news for future programming negotiations,” wrote analyst Craig Moffett of MoffettNathanson Research. “Every cable operator now goes to the table knowing that CBS not only won the war, but left TWC badly damaged even for having fought the fight.”
Be Wary of Punitive Measures at the Bargaining Table
Time Warner’s disappointing news also highlights why attempts to punish a negotiation counterpart into conceding often backfire. With its blackout, Time Warner played hardball with CBS in an attempt to frighten the network into conceding. But its focus on the pain it was inflicting on CBS blinded Time Warner to fact that it would suffer from the blackout at least as much.
How have you handled a negotiation gone wrong? Share your story with us in the comments.
Originally published in 2013.
Jim Camp (“Start with No”) explains this in his admonition that the negotiator should only be helping the adversary SEE the pain ahead, and not be (or try to be) the CAUSE of any pain.