Apple, Disney to rent shows for 99c

APPLE is in discussions with major TV companies to offer 99-cent ($1.12) rentals of television episodes, people familiar with the situation said.

The move comes as Apple tries to reshape the television business around its devices.

The company is nearing an agreement with Walt Disney to offer such rentals for some ABC television shows through the iTunes store, these people said, but the proposal is facing at least some resistance from big TV companies, including CBS, General Electric’s NBC Universal, Viacom and News Corp, people briefed on Apple’s proposal said.

Apple is pushing to reach agreements for its television service – which would give viewers a 48-hour window to view an electronic version of a show – before the new television season starts in September, some of those people said.

Apple declined to comment.

Lowering prices for TV shows delivered on Apple devices could help the company in the pitched battle to pipe content into American living rooms. Traditional cable- and satellite-TV providers are already facing competition from companies including Netflix and Hulu to roll out its own Web-TV service, too.

Media companies, however, have been wary of pumping too much content online, worried that they could encourage viewers to cancel their monthly TV subscriptions. The tens of billions of dollars media companies make each year from monthly bills are a key source of profits.

Through iTunes, customers currently can pay to download electronic copies of many cable and broadcast shows, often for $US1.99 each for the standard version, to view on iPhones, the iPad tablet computer, Apple TV or other devices. Apple has told media companies that the entertainment offerings through iTunes are too costly, according to people familiar with the matter, and has said the media companies would make more money if prices were lower.

Media companies are weighing the potential revenue they would make if more people paid for TV shows on iTunes against the dangers of eroding their business on traditional TV. But they don’t want to be left behind as viewers spend more time watching online. That has led some to offer some shows on their own websites, or through services like Hulu.

News Corp’s Fox is receptive towards Apple’s pitch of 99-cent TV-show rentals, according to people familiar with the matter, who cautioned that significant hurdles remain to reaching a deal with Apple. News Corp also owns The Wall Street Journal and The Australian. Bloomberg News reported Apple’s talks with Disney and other broadcasters Tuesday.

CBS is considering the Apple proposal, but is unlikely to agreed to an Apple service of this type, according to a person familiar with the matter. NBC and MTV-owner Viacom don’t currently intend to accept Apple’s proposal, according to people familiar with the two companies’ positions.

Electronic rentals differ from sales in part because they remain viewable for a limited time. But some media executives argue that they would still undercut online sales in iTunes because many people only watch episodes they buy only once.

One person briefed on the Disney-Apple talks said a deal is not done yet, but that one is close. Disney has been seen as a likely Apple collaborator in part because Apple chief executive Steve Jobs sits on its board and is the Burbank, California, company’s largest individual shareholder.


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