NBCU Drops Deal With Apple’s iTunes Store

Apple Says It Wouldn’t Pay ‘Double the Wholesale Price’ for NBC Episodes

By Todd Spangler -- Multichannel News, 8/31/2007 9:44:00 AM

NBC Universal has declined to renew its agreement with Apple to sell NBC TV shows through the computer maker’s iTunes Store.

Apple, confirming in a press release Friday that NBC would drop the iTunes distribution deal, announced that it will not be selling NBC television shows for the upcoming television season. Apple said it “declined to pay more than double the wholesale price for each NBC TV episode, which would have resulted in the retail price to consumers increasing to $4.99 per episode from the current $1.99.”

However, NBC wanted Apple to institute “better piracy controls” on iTunes and to allow NBC to bundle videos to increase revenue, according to a report in The New York Times, citing an anonymous source.

Earlier this week NBCU and News Corp. announced Hulu as the name for their Internet-video joint venture, and said it will launch invitation-only beta service in October. 

NBCU and News Corp. executives have indicated previously that the TV shows distributed by Hulu, which may include NBC’s Heroes and The Office, would be ad-supported and free for consumers to view.

NBCU CEO Jeff Zucker, in announcing the joint venture in March, said the company would possibly offer pay-to-download movies from Universal Pictures and 20th Century Fox.

Apple, in its press release, noted that ABC, CBS, Fox and The CW -- along with more than 50 cable networks -- are signed up to sell TV shows from their upcoming season on iTunes, at $1.99 per episode.

“We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase,” Apple vice president of iTunes Eddy Cue said, in a prepared statement. “We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers.”

Apple’s agreement with NBC ends in December. Three of iTunes’ 10 best-selling TV shows last season came from NBCU, accounting for 30% of iTunes’ TV show sales, according to Apple.