Apple Said to Seek Show-Rental Deal

Apple Said to Seek Show-Rental Deal
By BRIAN STELTER and MIGUEL HELFT
Copyright by The New York Times
Published: August 24, 2010
http://www.nytimes.com/2010/08/25/technology/25apple.html?hp


Apple, which is widely expected to announce a revamped product for television sets next month, is pressing the television networks to rent their TV series through its iTunes service for as little as 99 cents an episode.

The News Corporation, parent of the Fox network, and the Walt Disney Company, parent of ABC, are close to deals for iTunes rentals at 99 cents each, according to network executives with knowledge of the discussions who spoke Tuesday on the condition of anonymity. But the executives emphasized that there were still sticking points in the negotiations.

The executives said NBC Universal, parent of the NBC network; the CBS Corporation, parent of CBS; and Time Warner, parent of the TNT and TBS cable channels, all had reservations about the proposal. But the companies apparently have not ruled out a rental deal at some point.

The companies uniformly declined to comment on Tuesday. The executives spoke on the condition of anonymity because their employers had not authorized them to discuss the negotiations.

Apple declined to comment on Tuesday about any coming events or products.

Apple has been frustrated in its efforts to penetrate the living room, but many analysts expect the company to continue trying. The talks with the studios seem to indicate that the company is making a renewed push in that area.

The iTunes store currently sells TV episodes for $1.99 and $2.99 apiece, but its rental activities are limited to movies. The company is said to believe that inexpensive rentals of TV episodes would enhance its Apple TV and iPad products.

Allowing some rentals at 99 cents would be a shift in attitude for the networks, which were said to be skeptical of the proposal when Apple made it last winter. At the time, they fretted about the possible damage that low rental prices would do to sales of DVDs and electronic episodes on iTunes and Amazon.com.

Apple, however, has apparently kept up the pressure. Bloomberg News first reported on the renewed talks about the rentals on Tuesday.

The talks appear to be pegged to an Apple product introduction. Analysts anticipate that the company will hold an event in September to announce new products, including an updated iPod Touch and a revamped version of Apple TV, a product that Apple’s chief executive, Steven P. Jobs, has referred to as a hobby.

Apple TV helps to bring Web content to television sets, but it has been perceived as a dud. In June, Mr. Jobs laid out his frustration with the TV industry’s business model and seemed to suggest that any Apple efforts in that area would be modest.

“The problem with innovation in the television industry is the go-to-market strategy,” Mr. Jobs said at a technology conference, singling out the subsidized set-top boxes provided by cable and satellite companies.

“That pretty much squashes any opportunity for innovation because no one is willing to buy a set-top box,” he said.

Mr. Jobs suggested that until those industry dynamics changed, Apple was likely to continue tiptoeing.

“I am sure smarter people than us will figure this out,” he said. “But that’s why, when we say that Apple TV is a hobby, that’s why we use that phrase.”

The revamped Apple TV is expected to have a new user interface and employ the same iOS software used on the iPhone and iPad.

Brooks Barnes contributed reporting.