Bargaining is not negotiating

Sky have been ordered by the media regulator Ofcom to open up their Sky Sports 1 and 2 channels to competitors. But just before the physical sharing is to take place there’s been a typical Murdoch move.

The wholesale price Sky can charge its (not so friendly) brethren at BT Vision is linked to their own retail price. Sky have lifted their retail, and therefore the wholesale price. This is cutting your nose off to spite your competitor. Of course they knew that BT had advertised the service at £16.99 forcing them into a loss-leader position.

The silver lining on BT’s cloud is that they’ll be the cheapest on the market until they decide the pain is too much to bear. They should vacuum up some price sensitive viewers from rivals, giving Sky an own goal in the short term.

It’s the epitome of bargaining versus negotiation. I met a wonderful professor recently who hit home that there’s a massive difference in the two:

– Bargaining occurs when each party seeks the best outcome for themselves i.e. win-lose (think about buying/selling a car with a complete stranger – you’re bargaining)

– Negotiation occurs when both parties try to ‘create value’ in unity. Our coalition government is a timely example of this win-win situation (they have little without each other).

Sky were forced into negotiating with competitors and turned it firmly into a bargaining situation. When you sit down with that supplier/client next week will you be bargaining or negotiating with them?

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