Changing its iTunes

HBO to break ranks, charge more per episode

HBO will become the first television network to charge more than the standard $1.99 per episode on Apple's iTunes.

The network is expected to announce as soon as today that a wide range of programs including "The Sopranos" and "Sex and the City" will be made available on iTunes. Newer programs currently running, including "Entourage," will go day-and-date with their DVD releases.

Still unknown is how much more HBO will charge — or whether the network is getting a higher revenue split than other iTunes partners.

HBO and Apple declined comment.

That HBO commanded a mark-up, first reported Monday on Portfolio.com, is unprecedented on iTunes and likely will send many of Apple's content partners back to the negotiation table once their current contracts are up.

Last year, NBC Universal withdrew its TV programs from iTunes, citing Apple's inflexibility on a range of issues, including pricing and content security.

The deal will not make current HBO series available one day after their original airdate, as many TV networks have arranged with Apple.

HBO has abstained from adding any of its programming to iTunes for fear of cannibalizing its primary revenue sources: premium subscriptions and its healthy DVD business. The network does have some original material online, but in the form of free podcasts.

However, the growth of iTunes as a download platform likely got too robust to ignore. In addition, many of HBO's best-selling DVDs have likely been on the market long enough to have exhausted consumer appetites but could find a whole new life online with a segment of users who don't want to buy discs.

In addition, Time Warner CEO Jeff Bewkes signaled last week that the conglomerate's studio films would be made available on a day-and-date basis with VOD. Although his comments did not apply directly to HBO, Bewkes — HBO's former CEO — might be lowering the barriers of protection on its DVD business companywide.

HBO puts seasons of its hit series out on DVD at varying times, either waiting until the following season arrives on air but sometimes as soon as six months after a season ends. Many of those episodes also continue to run on HBO's linear channels and VOD platform. (partialdiff)
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