It is the spring of 1997. You are a newly hired programming executive at CBS Televi- sion. Your job is to set the prime time programming for CBS on Monday nights for the fall season.

For the last 20 years, ABC has shown football on Monday nights during the fall. Monday Night Football has been spectacularly successful, and is consistently the top- rated show in that time slot. In the past, ABC has signed a 3 or 4 year contract with the National Football League for the exclusive rights to show Monday Night Football with little competition for the contract from CBS and NBC, who have separate contracts to broadcast football on Sundays. For Monday night, CBS and NBC must choose programs that split the non-football audience.

The seemingly stable programming landscape changed significantly when Fox TV, in an attempt to become the 4th major network, outbid CBS for its historical share of the Sunday football programming. CBS has vowed, however, to be competitive in the bid- ding for all parts of the National Football League programming as the existing contracts expire U ? including Monday Night Football. Indeed, a senior executive claimed that CBS would pay "whatever it takes" to reclaim their football programming.

This fall, ABC will show Monday Night Football (which ABC has under contract for another year). Being a relatively new network, Fox has yet to develop a full schedule of prime time programming; Fox made it clear that it will continue to let its affiliates show local news at 10 p.m. this fall. In developing your programming strategy, you may take both of these decisions as fixed. The share of viewers who tune into cable channels is variable and depends on the programming decisions of NBC and CBS. However, the audience of individual cable channels is too small to influence the programming of the major networks, and you should ignore them in your decision process.

Your goal is to maximize the economic profits that CBS earns from this time slot. These profits depend on the programming choices made by both CBS and NBC; the profits associated with different programming choices are shown in the matrix below, in millions of dollars. Because viewers become accustomed to the programming schedule, often making commitments to be home for a favorite show, the networks face significant costs if they change the schedule after it is announced. Because of the significant uncer- tainty about who will bid for Monday Night Football next year (and, therefore, about what profits will look like and even who the relevant players will be in the future), you will make your programming decision based only on the economic profits for the coming fall season. You may also ignore other time slots when ABC and Fox are more significant strategic players and the interaction is more complicated.

The game matrix is as follows (CBS is the row player and NBC is the column player):

[matrix in picture]

(a) For the last several years, NBC has shown movies during the 10-11 p.m. slot, while CBS has aired a drama (last year it was Chicago Hope). This combination of actions has the advantage of maximizing the joint profits of the two networks, and allows CBS to attain its highest possible profit level. Your boss has proposed continuing this pattern for another year. Do you agree 19 that this is the best strategy? Why or why not? If you would not choose to show a drama, what are other sustainable programming choices for CBS and NBC?

(b) Upon arriving at CBS, you hear persistent rumors that ABC has signed a secret extension of its Monday Night Football contract, for another 3 years. If you take the rumors as truth, you realize that CBS and NBC will be playing this scheduling game for a total of 4 years with roughly the same profits, although the individual payoffs to both parties will rise by 10% each year due to expected increases in the price of advertising. Would your answer to (a) change if the rumors are correct?

(c) After checking with Columbia Business School alumni who work for the National Football League, you discover that the rumors about ABC are false. Thinking about your decision further, you seem to recall something that someone said in some class about a first mover advantage. You decide you should launch a pre-emptive strike and pre-announce your schedule. What would you choose? Why?

(d) Just before announcing your scheduling choice, you discover that NBC has just hired a producer who has promised to increase NBC's profits from comedies by $20 mil- lion. This increase in profit will come from viewers who would have otherwise watched cable television. Since CBS's viewership will not change, NBC's hiring decision will have no direct effect on the profits that CBS earns. Will this hire by NBC change your programming choice? Why?

It is the spring of 199?. You are a newly hired programming executive at CBS Televi- sion. Your job is to set the prime time pregranuning for CBS on Monday nights for the fall season. For the last 2i} years, ABC has shown football on Monday nights during the fall. Monday Night Football has been spectacularly successful, and is consistently the top- rated show in that time slot. In the past, ABC has signed a 3 or 4 year contract with the National Football League for the exclusive rights to show Monday Night Football with little competition for the contract from CBS and NBC, who have separate contracts to broadcast football on Sundays. For Monday night, CBS and NBC must choose programs that split the non+football audience. The seemingly stable programming landscape changed signicantly when Fox TV, in an attempt to become the 4s: major network, outbid CBS for its historical share of the Sunday football programming. CBS has vowed, honever, to be competitive in the bid- ding for all parts of the National Football League programming as the existing contracts expire U including Monday Night Football. Indeed, a senior executive claimed that CBS would pay \"whatever it takes" to reclaim their football programming. This fall, ABC will Show Monday Night Football {which ABC has under contract for another year). Being a relatively new network, Fox has yet to develop a full schedule of prime time programming; Fox made it clear that it will continue to let its affiliates show local news at It] pm. this fall. In developing your programming strawgy, you may take both of these decisions as fixed. The share of viewers who tune into cable channels is variable and depends on the programmmg decisions of NBC and CBS. However, the audience of individual cable channels is too small to inuence the prograiruning of the major networks, and you should ignore them in your decision process. Your goal is to maximize the economic prots that CBS earns from this time slot. These profits depend on the programing choices made by both CBS and NBC; the prots associated with different programming choices are shown in the matrix below, in millions of dollars. Because viewers become accustomed to the programming schedule, often making oommitments to be home for a favorite show, the networks face significant costs if they change the schedule after it is announced. Because of the significant uncer- tainty about who will bid for Monday Night Football next year (and, therefore, about what prots will look like and even who the relevant players will be in the future}, you will malce your programming decision based only on the economic prots for the coming fall season. You may also ignore other time slots when ABC and Fox are more significant strategic players and the interaction is more complicated. The game matrix is as follows (CBS is the row player and NBC is the column player): COMEDY DRAMA MOVIE COMEDY 50, 130 130, 140 110, 130 DRAMA 80, 180 90, 100 180,170 MOVIE 90, 190 120, 130 80, 90 (a) For the last several years, NBC has shown movies during the 10-11 p.m. slot, while CBS has aired a drama (last year it was Chicago Hope). This combination of actions has the advantage of maximizing the joint profits of the two networks, and allows CBS to attain its highest possible profit level. Your boss has proposed continuing this pattern for another year. Do you agree 19 that this is the best strategy? Why or why not? If you would not choose to show a drama, what are other sustainable programming choices for CBS and NBC? (b) Upon arriving at CBS, you hear persistent rumors that ABC has signed a secret extension of its Monday Night Football contract, for another 3 years. If you take the rumors as truth, you realize that CBS and NBC will be playing this scheduling game for a total of 4 years with roughly the same profits, although the individual payoffs to both parties will rise by 10% each year due to expected increases in the price of advertising. Would your answer to (a) change if the rumors are correct? (c) After checking with Columbia Business School alumni who work for the National Football League, you discover that the rumors about ABC are false. Thinking about your decision further, you seem to recall something that someone said in some class about a first mover advantage. You decide you should launch a pre-emptive strike and pre-announce your schedule. What would you choose? Why? (d) Just before announcing your scheduling choice, you discover that NBC has just hired a producer who has promised to increase NBC's profits from comedies by $20 mil- lion. This increase in profit will come from viewers who would have otherwise watched cable television. Since CBS's viewership will not change, NBC's hiring decision will have no direct effect on the profits that CBS earns. Will this hire by NBC change your programming choice? Why