Money and term agreements were the crux of the fallout between NBC Universal and iTunes, with NBCU not renewing its digital download deal with Apple…
“Television programs such as Heroes will not be available for download on iTunes in the US, after broadcaster NBC Universal ended its deal with Apple… The rift was based on a doubling of the wholesale price Apple pays for each NBC TV episode.”
The firms are reportedly in talks to save the deal; however, on Friday Apple released a statement explaining the specific NBC price demands that it found unacceptable, an unusual move for a company that expects to be able to successfully negotiate a price disagreement.
Apple said that NBC had demanded more than double its previous wholesale price for its programs. The dramatic increase was a doubling of the wholesale price Apple pays for each NBC TV episode. This meant that shows would cost users $4.99 an episode, rather than the current $1.99, Apple added.
Agreeing to such an increase would have placed Apple in an awkward position with ABC, CBS, Fox, The CW, and more than 50 cable networks that have agreed to sell their TV shows from the upcoming season at the lower price.
NBC is the biggest provider of video downloads to the Apple online store, accounting for about 40% of sales. This includes 30% of the television shows which Apple sells through iTunes.
NBC’s current deal with Apple was due to end in December, but Apple said it would not sell new series of programs as this would mean it had to end them mid-series.
However, as the dispute continues, come December, iTunes users may have to say goodbye to hit TV shows like “Heroes” and “The Office.”
“As a condition of our contract, NBC Universal has notified Apple that it is not renewing this contract,” Amy Zelvin, a NBC Universal spokesperson, told MacNewsWorld.
NBC Universal confirmed Friday that it has notified Apple it will not renew its current contract to sell its television programming as digital downloads through the online store.
The iTunes contract stipulated that NBC Universal (NBC U) notify Apple of its intent to cancel 90 days prior to the expiration date, otherwise the contract would automatically renew.
“We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase,” said iTunes Vice-President Eddy Cue. “We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers.”
NBC is not the first major iTunes supplier to bang heads with Apple over pricing. Universal Music Group, owned by Vivendi, refused to renew its contract with Apple in July, saying it would sell music on iTunes at will. This gives Universal the option of removing songs from the store on short notice.
“This does not bode well for Apple because, frankly, there are way too many alternatives to iTunes for people who want to watch these shows. There is your DVR, NBC.com, now Hulu.com, and soon your cable system VOD (video on demand) lineup, which will be adding prime time episodes gradually over the next year.”