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Rupert Murdoch may be swing vote in Apple's 99 cent TV rental pitch


While most in the TV industry are opposed to Apple's proposed plan for 99 cent episode rentals, its efforts could be saved by News Corp CEO Rupert Murdoch's drive to save the newspaper industry, according to a new report.

According to the Los Angeles Times, content providers NBC Universal, CBS Corp. and Time Warner Inc. have all "dug in their heels in opposition" to Apple's desire to rent TV episodes for 99 cents through iTunes. TV executives reportedly believe that the plan would break the current economic model.

Unsurprisingly, Walt Disney Co., of which Apple Chief Executive Steve Jobs is the largest shareholder, has agreed to go along with the plan.

Still allegedly considering it, however, is News Corp., owner of the Fox network. Authors Dawn C. Chmielewiski and Meg James claim that executives at the media giant are divided, as some are concerned that 99 cent rentals could cut into DVD sales or pull viewers away from watching live network TV.

"But other top officials at News Corp — especially Murdoch — are prepared to join Apple's six-month pricing trial because it could cement a relationship with Apple's powerful chief executive, Steve Jobs, and reap benefits for other divisions within the company, namely newspapers," the report said.

"Murdoch, who began his career running small newspapers in Australia, has said that the Apple iPad will rescue old print media by luring readers who will not subscribe to a newspaper. That makes the iPad a keystone in Murdoch's ambition to launch a digital national news product this year."

Previous reports have indicated that Murdoch is pushing for a unique news organization devoted specifically to tablet devices like Apple's iPad. The subscription service is seen by the CEO as an opportunity to help News Corp. transition into the digital era for news. If created, the news organization would have its own staff and be its own, entirely new entity.

As for iTunes video sales, the Times noted that movie and TV purchases have stalled in recent years, as the idea of owning a digital video has not caught on with consumers like owning music has. Apple has reportedly told the TV networks that 99 cent rentals will more than double the transactions.

TV executives, however, feel that a major discount on show rentals "sends the wrong message" when broadcasters have been having cable operators pay for the right to retransmit network TV signals.

"Other major TV producers say privately they fear the industry is about to fall into the same trap as the music industry," the report said. "Faced with burgeoning Internet piracy, music labels struck a deal with Apple to sell 99-cent song downloads in 2003 — inadvertently torpedoing CDs sales. Warner Bros., for example, refuses to jeopardize its lucrative syndication business, which can haul in an as much as $2 million per episode for the sale of reruns of shows such as "The Big Bang Theory," a comedy it produces for CBS."

The report from the Times also contradicts recent indications that CBS remained in discussions with Apple for 99 cent TV show rentals. A recent report from Bloomberg indicated that Apple and News Corp. were in "advanced talks" to offer the rentals, which would give users 48 hours to watch a program.

Less interested has been NBC, which cable provider Comcast hopes to own, following a federal review. A Comcast-owned NBC is seen as the least likely partner for Apple, as the availability of inexpensive TV show rentals through iTunes could allow some customers to cancel their cable subscription.