9781118041581

in revenue, minus $15 million in “normal” production costs). The “top” entry of

$9 million requires some explanation. This estimate represents the personal value

Letterman puts on getting the 11:30 slot. Again and again during the negotiations,

Letterman stated how much being able to perform for the broader mainstream

audience meant to him. The $9 million is a guesstimate of how much the 11:30 slot

is worth to him. In short, the total value of the deal to Letterman includes not only

his monetary compensation but also the value he puts on moving to 11:30.

What if NBC had dumped Leno and offered Letterman the earlier time slot

at terms matching CBS’s offer? The third agreement shows the consequences.

644 Chapter 15 Bargaining and Negotiation

TABLE 15.2

The Letterman

Negotiations NBC CBS Letterman Total

1. Dave at NBC, 12:30
   Revenue 100 0
   Dave’s salary  55
   Leno’s salary  2
   Cost of two shows  30
   63 0 5 68


2. Dave to CBS, 11:30
   Revenue 50 35 9*
   Dave’s salary  14 14
   Leno, 1 new host  3
   Shows: costs, profits  30  25 10 (25 15)
   17  433 46


3. Dave at NBC, 11:30
   Revenue 75 0 9*
   Dave’s salary  14 14
   Buy out Leno  5
   Shows: costs, profits  41 10
   15 0 33 48


4. Dave gets big raise
   Revenue 100 0
   Dave’s salary  25 25
   Leno’s salary  2
   Shows: costs, profits  40 10
   33 0 35 68


5. Dave to CBS, 12:30
   Revenue 60? 40?
   Dave’s salary  14 14
   Leno, 1 new host  3
   Shows: costs, profits  30  25 10
   27 1 24 52

* Letterman’s personal value for the 11:30 P.M. slot.

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