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Apple's online TV proposal stirs interest from broadcast networks

Apple, which revolutionized the music industry with iTunes, is now turning to TV and has drawn the tentative interest for a new service from two of the nation’s top TV networks.

Apple’s plans could shake the TV business to its core, essentially offering a less expensive online alternative to cable and satellite subscriptions. ABC and CBS are among the networks that are considering joining the Apple venture; however, negotiations are at a very early stage and could change.

ABC is a unit of Walt Disney, which could also make two of its cable channels, ABC Family and the Disney Channel, available through the proposed service. CBS owns half of the CW Network, a smaller broadcaster that could also join. Neither network would comment.

The Wall Street Journal reported that other major TV companies, including News Corp., which owns FOX, and Turner Broadcasting, which owns CNN and TNT, are wary of Apple’s initial overtures.

To overcome hesitation on the part of studios, Apple would pay the networks per-subscriber rates higher than those offered by cable or satellite providers. A customer downloading a network like ABC would amount to between $2 and $4 each month, according to the Journal, while basic cable channels would equate to between $1 and $2 over a similar period.

If successful with its plans, Apple would have the service ready sometime in 2010, though this is contingent on enough studios agreeing to a deal in time. It’s unknown if any have actually committed to subscription iTunes TV so far.

The plans are complimentary to but not absolutely essential for Apple’s purportedly in-development tablet device, the larger screen of which would be ideal for watching videos. Reports said the tablet is equipped with an approximately 10in multitouch screen, a variant of the iPhone OS and possibly 3G data rates.

A subscription plan would be a distinct break from Apple’s prior attitude, which has usually insisted on per-item ownership instead of subscriptions. TV may be different in that it has long followed a subscription model and would be easier to digest for iTunes visitors than subscription music.

Internet subscriptions to TV networks, delivered over broadband networks, could destabilize the major subscription players, who depend on bundling dozens of channels for their subscription services. Apple could not only undercut the cost of cable, but also focus only on the most popular programming.

It has been reported that Apple is considering a $30/month supplement to iTunes to carry TV programming, but that number is considered to be far from certain. Disney is seen as a possible partner because Apple’s chief, Steve Jobs, is a board member and because it was the first company to sell single TV episodes on iTunes four years ago.

The major broadcasters, and some cable channels, now sell episodes for $1.99 or $2.99 on iTunes. Among the most often purchased shows this year on iTunes were “Gossip Girl,” on the CW network; “NCIS,” on CBS; and “FlashForward” and “Grey’s Anatomy,” both on ABC.