Contracts: What you can learn from Conan O’Brian and NBC

Conan O'Brien

A week ago, Conan O’Brian lost his job, as the host of the Tonight Show. Actually, it appears the Conan quit when the network (NBC) decided to move the show from 11:30 pm to 12:05 am. http://tinyurl.com/yz5xt7u  The network’s decision was made after examining Jay Leno’s rating of his 10 pm show. The poor ratings prompted the network to move Jay’s show to 11:35 pm and bump Conan to 12:05 am. Conan protested the move by quitting the show. Read his announcement letter here. http://tinyurl.com/ycv5vly  Many of Conan’s fans have hit the social networking sites to show their support; for example “I’m with Coco”on Facebook. http://imwithcoco.com  

But astute reader, I know you are asking, how can this happen when he had a contract? Easily — the parties built an exit plan into the contract. NBC and Conan, while negotiating the contract, addressed the question of ’what if we need to change Conan’s time slot because the ratings are poor?’. We will never know the actual answer to that question, unless we read their contract. However, rest assured that if NBC’s changing the show’s time slot breached the contract, Conan would have immediately filed an injunction and initiated a lawsuit. The latest rumors are that NBC will pay Conan $30 to $40 million in liquidated damages. http://tinyurl.com/yh99dtx Imagine the money the parties are saving by avoiding an expensive lawsuit.

What can you, as a business owner, learn about contracts from Conan?

The best contracts plan the end of the agreement, while the parties are in the honeymoon stage. In essence, the parties discuss the worst case scenarios during negotiations prior to signing the contract. I call this process—playing the ‘what if’ game. When you are negotiating a contract, always ask what happens if I can not finish what I promised to do? What happens if the other side cannot finish what they have promised to do? Most people spend a considerable amount of time, working out the details of what they plan to do. But they fall short of discussing the unpleasantness of broken promises. However, you dear reader, are ahead of the curve. If you plan the end of your contract before beginning your contract, you will avoid most of these unpleasantries and expenses.

Good luck.

Do you have questions about drafting a contract? Call us for a free consultation or chat live with a business attorney at www.mckeeoffice.com  

Sharmil McKee | Business Lawyer | blog@mckeeoffice.com