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Apple Dumps NBC After iTunes Negotiations Breakdown
Friday, August 31st, 2007 at 1:40 PM - by
Following the news that NBC Universal will not be renewing its contract to offer TV shows for download through the iTunes Store, Apple announced on Friday that it will not offer the network's fall line up for sale. Apple vice president of iTunes, Eddie Cue, said the talks fell apart after the company refused to pay NBC rates that would have driven TV show prices up to US$4.99 per episode.
Apple prices TV show episodes at $1.99 each. Shows from ABC, CBS, FOX, CW, and over 50 cable networks are scheduled to be available for download once the new program season begins this fall.
"We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase," he said. "We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers."
NBC's contract with Apple expires in December, which meant that the network's programming would have been available on the iTunes Store only for a partial season. Instead of offering customers the partial season, Apple chose to not offer the episodes at all.
The move shows Apple is ready to play hard ball with the networks, which may send out the message that the Cupertino-based company will not allow media companies to dictate what it considers to be unfair pricing. While NBC may have thought that Apple would give in to charging customers more for TV show downloads by threatening to pull its content, Apple seems to have stepped up to the plate and told the network to take its shows and go home.
Apple will likely see some kind of a dent in its iTunes Store revenue because NBC's TV shows accounted for about 30 percent of the store's TV show downloads. NBC will also likely take a hit on revenues since no one will be able to buy its shows at Apple's online store.
The news also means that a percentage of customers that were purchasing NBC's programming from the iTunes Store will likely switch to unlicensed file sharing networks to get the shows.
NBC has until the end of the year to reconsider, and Apple did leave the door open for further negotiations.
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