Boost Your Negotiating Leverage: 3 Strategies
What do you do when you’re outgunned, outmaneuvered, and out of options? Rocco Commisso, founder and CEO of regional cable operator Mediacom, was in a very public, high-stakes battle with broadcasters. At the beginning, he had very little leverage. That didn’t stop him from negotiating fiercely, and eventually winning terms he could live with.
Broadcasters charge cable companies so-called retransmission consent fees in exchange for the right to carry their programming. The fees are notoriously contentious, and when broadcasters own rights to must-see events such as the Super Bowl, they enjoy significant leverage. No cable company can afford to alienate its subscribers by not airing the big game. As Commisso put it, “I’d get killed without it, and broadcasters know that.” As a result, Mediacom is at a significant disadvantage when retransmission consent fees are renegotiated, which generally happens every few years.
Here’s how Commisso successfully increased his negotiating leverage during these very difficult, very public debates.
1. Build alliances Who is impacted by the negotiation? What are each constituency’s priorities? How can you play each one off the other to improve your odds of success? Commisso believed that government regulators could be persuaded to intervene if frustrated customers demanded action loudly enough. He hoped to convince regulators to enforce a so-called standstill mechanism, which would make sure he continued to get programming while the negotiations were taking place. That would eliminate the threat of losing customers to competitors, since broadcasters wouldn’t be able to call a programming blackout during negotiations.
When Commisso was unable to get the government to act on his behalf, the broadcasters did indeed pull their programming. During one such blackout, Commisso sent street teams to college campuses to win the support of his most vocal customers: frustrated students who were unable to watch their school’s team. He also enlisted the support of Congressmen from affected districts who feared calls from angry constituents. Meanwhile, to placate customers, he offered promotional discounts on bundled services.
2. Find a megaphone: How can you attract attention to your cause? As Commisso says, “When you’re a little guy it pays to be loud, and I have a reputation that I can be loud.” Commisso wrote a public letter to FCC Chairman Julius Genachowski, arguing that “the [FCC] Commission’s inexplicable inaction … costs Americans billions of dollars...forces consumers to pay more for less…[and] exposes consumers to service disruption.” In the traditionally staid world of cable, his letter generated dozens of news articles and helped garner the attention of politicians, regulators, and his own customers.
3. Make sure opponents know you’re not bluffing: As Commisso says, “You have to believe that what you’re doing is right. For me, it’s instinctive.” Once he resolved to hold out for improved terms, Commisso was willing to put up with an almost-unheard-of month-long programming blackout before finalizing one recent contract.
That’s a risky strategy, of course. Both Commisso and his counterparties in the negotiation understood that if frustrated customers left for competitors, Mediacom’s business would suffer. Commisso’s resolve to take that risk sent a message to his the broadcasters that he could not be pressured to cave in.
Not all negotiations lend themselves to these strategies. But when you’re willing to go scorched-earth, Commisso’s experience can help you chart your course.
SCHUYLER BROWN | Columnist | Host of Founders@Fail
Schuyler Brown is the host of Founders@Fail. He currently works at High Peaks Venture Partners, where he sources and evaluates potential investments. Brown holds a B.A. from Columbia University and an M.B.A. from Columbia Business School.