updated 10:15 am EDT, Tue August 31, 2010
Company seen as swing vote
The future of TV shows on iTunes -- and possibly TV itself -- may be riding on whether or not News Corp. decides to back Apple plans to allow 99 cent show rentals, says the LA Times. The industry has allegedly been wrestling with the merits of Apple's idea for several weeks, as even if it does generate a lot of downloads, it could potentially wreck the economic model used to finance modern TV shows. While Disney is now claimed to be onboard, CBS, Time Warner and NBC Universal are opposed.
The major undecided party is News Corp., within which executives are split, according to anonymous sources claimed to be close to the conservations. The opposition notes that 99 cent rentals could cut into DVD sales, simultaneously luring people away from network TV, a market driven by about $20 billion in advertising. The pro faction is headed by CEO Rupert Murdoch, and thought to be motivated by benefiting other divisions in News Corp., primarily newspapers.
By endearing the company to Apple CEO Steve Jobs, it's hoped that News Corp. may be able to gain favorable terms elsewhere. In the past, Murdoch has suggested that the iPad will save print media by attracting people who would not otherwise subscribe to a newspaper. News Corp. is in fact believed to be readying a national digital newspaper for launch by the end of the year.
For Apple cheap TV rentals are thought to be a way of reviving iTunes video sales, which have mostly crawled since 2008. These have been hurt by services such as Hulu, which cost the public only in terms of exposure to advertising. Apple executives are said to be pitching Hollywood on the idea that 99 cent rentals could more than double the amount of transactions.
Should it have its way, the company is expected to run a six-month pricing trial, in which networks will be guaranteed the same amount of revenue higher prices might otherwise generate. As a tradeoff, Apple is asking for commercial-free versions of popular shows within 24 hours of original broadcast.
Other concerns in the TV industry include the possibility of harming syndication sales, which for Warner Bros. can earn up to $2 million per episode. Executives also suggest that discounted rentals might convey the wrong message when they are trying to get cable companies to pay for the right to retransmit network TV.