NBCU Declines to Renew iTunes Contract
Apple says that NBC demanded double the current wholesale price per episode
By Alex Weprin -- Broadcasting & Cable, 8/31/2007 10:29:00 AM
NBC Universal has decided not to renew its contract with Apple iTunes, a spokesperson for the media company confirmed today. The news comes two days after NBCU and News Corp. unveiled the name of its forthcoming online video joint venture. Hulu, as it has been dubbed, is being positioned as a challenger to current online-video heavyweight YouTube.
If a new agreement is not reached before the current contract expires in December, it could result in the media conglomerate pulling its video content from iTunes, which dominates the downloadable digital content market.
In a statement released Friday, Apple says that NBC wanted "more than double the wholesale price" for each episode, which would have pushed the retail price of each episode to $4.99.
Apple also announced that they will not feature any of NBC's upcoming Fall shows in the iTunes store, as it would have to stop selling them halfway through the season when the contract ends.
The decision was first reported Friday in The New York Times, which noted that NBCU content, including broadcast shows Heroes and The Office, accounts for some 40 percent of all video downloads on iTunes. The Office has been featured on advertising for the iPhone and iTunes, and has consistently been one of the most downloaded shows at the online store.
“We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase,” said Eddy Cue, Apple’s vice president of iTunes, in a statement responding to NBC's decision. “We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers.”
NBCU's joint venture with News Corp., announced in March, takes aim at Google-owned video-sharing giant YouTube. Known until now by the working title NewSite, Hulu will offer popular NBCU and News Corp. TV programs, including iTunes staples like NBC's 30 Rock and My Name Is Earl, as well as Fox's 24 and FX's The Riches.
