Monday, December 03, 2007, 08:00 am PT (11:00 am ET)
Apple drops NBC television shows from iTunesApple, having yet to renew its content distribution agreement with NBC Universal, began pulling all television programming produced by the network from its iTunes digital download service this past weekend.
The removal includes hit television shows such as Heroes and the Office, as well as programming from the conglomerate's sister networks, Bravo, NBC Sports, CNBC, USA Networks and the Sci Fi channel.
Shoppers on the iTunes Store may still purchase and download a handful of NBC-aired shows, such as Chuck and Journeyman, which are broadcast by the network but produced elsewhere, and therefore not under NBC's distributive control.
Previously Apple's largest television distribution partner, NBC supplied the iTunes Store with over 1,500 hours of programming that accounted for more than 30 percent of the service's television show revenues, including three of the 10 best selling shows during the summer season.
The two firms, however, entered into a bitter feud over future pricing structures this past July when NBC sought to institute flexibility in wholesale pricing and bundle shows together in more attractive ways. Apple declined the offer.
"It is clear that Apples retail pricing strategy for its iTunes service is designed to drive sales of Apple devices at the expense of those who create the content that make these devices worth buying," NBC's executive vice president of communications, Cory Shields, said at the time.
For its part, Apple in a public statement alleged that NBC was seeking to 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.
NBC immediately refuted the claim, maintaining that it was only trying to open the door to more flexible pricing methods, and was seeking to experiment with higher pricing for one hit show such as Heroes by raising the price from the iTunes standard $1.99 to $2.99 on a trial basis.
"We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase," Apples vice president of iTunes Eddy Cue said in September. "We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers."
Since then, NBC has become even more confrontational with the iPod maker, with chief executive Jeff Zucker in late October using a breakfast hosted by Syracuses Newhouse School of Communications to urge colleagues to take a stand against iTunes, charging that the service was undermining the ability of traditional media companies to set profitable rates for their content online.
"We know that Apple has destroyed the music business — in terms of pricing — and if we dont take control, theyll do the same thing on the video side," he said.
For the time being, NBC appears poised to go it alone by offering its television programming via its ad-supported Web-based NBC Direct service. It also plans to offer the shows via Hulu, a joint venture with NewsCorp. still in the beta testing stage.
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