Media executives criticize Apple TV business model
Time Warner chief executive Jeff Bewkes has joined a chorus of media executives complaining about low-cost rentals from Apple’s new television viewing device. They say it threatens sales of TV shows to branded networks.
Bewkes issued the warning at the Royal Television Conference in London.
“How can you justify renting your first-run TV shows individually for 99 cents an episode and thereby jeopardize the sale of the same shows as a series to branded networks that pay hundreds of millions of dollars and make those shows available to loyal viewers for free?” Bewkes asked.
According to Bewkes, “new entrants” like Apple need to offer up a “superior TV experience” while simultaneously supporting or improving the overall economics that make the programming possible. He remained confident that revenues are on the uptake, with the number of viewers growing, paid-television penetration increasing and advertising and subscription revenues improving.
Bewkes is the latest in a line of media conglomerate bosses that have criticized Apple’s new 99-cent rental model. Although Apple CEO Steve Jobs believes the studios will quickly “see the light” and agree to the rentals, several executives from the major studios have remained vocal in their opposition of the plan.
At last week’s Goldman Sachs media executive conference, Viacom CEO Philippe Dauman called the 99-cent price “not good.” “We don’t think Apple has it quite right yet,” Dauman said.
Outgoing NBC Universal exec Jeff Zucker has said the pricing “devalues” his company’s content. “We do not think 99 cents is the right price point,” Zucker said. Zucker will soon leave his position if government regulators approve the NBC Universal-Comcast sale.
Not all media execs are critical of Apple’s new model, though. Fox and ABC were the first studios to agree to the 99-cent rentals. News Corp President Chase Carey views Fox’s participation as a “short-term test.” Robert Iger, CEO of ABC’s parent company Walt Disney Co., thinks his company is better off “aligning with technology companies than fighting them.”
This week, Apple began delivering its new Apple TV device, which is priced at $99.