NBC Universal Ditches iTunes

Not happy with Apple for purportedly underselling its digital content, media conglom NBC Universal said Friday it will not renew its contract to sell television shows on iTunes

By Josh Grossberg Aug 31, 2007 7:59 PMTags

NBC Universal is thinking different, all right.

Not happy with what it calls Apple's penchant for underselling its digital content, the media conglomerate said Friday it will not renew its contract to sell television shows on iTunes.

The news would be a big blow to the online store, considering NBC Universal-produced series as well as related sports, news and entertainment offerings account for roughly 40 percent of its downloads.

However, Apple didn't waste any time cutting the cord.

In retaliation, the computer maker announced it would discontinue selling NBC programming before the 2007-08 season debuts next month. That's bad timing for the fourth-place broadcaster, which was hoping to climb out of the ratings basement and banking on a major Internet presence to help it promote its upcoming fall slate.

"We are disappointed to see NBC leave iTunes, because we would not agree to their dramatic price increase," Eddy Cue, Apple's vice president of iTunes, said in a statement.

The split means fans of such venerable TV shows as NBC's Heroes, The Office, 30 Rock and Sci Fi's Battlestar Galactica are going to have to look elsewhere if they plan on viewing them on the Web.

The rift developed after the media giant sought to double the download cost from $1.99 per episode to $4.99 and bundle other shows together at different pricing structures. When Apple balked, NBC Universal complained that the computer maker refused because higher prices might hinder sales of its iPod, iPhone and other electronic gadgets. Apple, on the other hand, argued that a varied pricing strategy would simply cause confusion with its customers and prohibit more people from utilizing the store.

The suits at NBC Universal also wanted improved piracy controls from Apple to stop people from uploading bootleg content to their iPods.

While the two sides are still said to be talking the matter out, a rep for NBC U indicated the decision to withdraw from iTunes was necessary, since the agreement would have automatically renewed—unless NBC gave the Steve Jobs-led company three months' notice.

NBC Universal, which is owned by General Electric, also cited as another factor for pulling out: the possibility that the popular digital-entertainment hub is facing stiffer competition from a variety of startups aiming to provide the same quality audio- and video-downloading services.

While iTunes remains the number one destination for Netizens to get their audio and digital video fix, companies like Amazon, Wal-Mart, Microsoft and Sony have all expressed a keen desire to challenge Apple's marketshare.