Apple wrapped up a deal with ABC and Fox to rent their TV episodes for 99 cents on the Apple iTunes store, but NBC declined to play. At the time that both News Corp.’s Fox and ABC agreed to the lower price, their TV shows were already available through iTunes, for computers, iPhones, iPads or other devices, at between $1.99 and $2.99 per episode. At that price, sales numbers were low, and the new pricing is designed to improve those sales numbers.
The problem with pricing episode rentals too low is that large media companies such as Disney and NBC Universal risk alienating their cable and satellite TV partners, which pay significant broadcast retransmission fees for licensing TV channels.
For that reason, some major media companies have refused to sign off on the 99-cent rentals, most prominently NBC Universal. CEO Jeff Zucker announced that the network has no plans to partner with Apple with the new pricing; currently, NBC TV episodes are available for download in the iTunes store for $1.99. CBS is another network that is holding out.
Analysts anticipated that Disney’s ABC would sign on to the 99-cent plan, in part because Apple’s Steve Jobs is now Disney’s largest individual shareholder. Disney has been a pioneer in using the mobile platform to distribute content including a short-lived mobile virtual network and an early decision to rent its shows on iTunes, in 2005.
Fox’s participation in the 99-cent rentals was much less of a slam dunk, and some executives within the company are purportedly opposed to the move. But News Corp. President Chase Carey has described the effort as a short-term trial. Fox has also only agreed to the 99-cent pricing for shows it both produces and airs, which includes “Glee,” “Lie to Me” and “Bones.”