NBC Uni sours on 'Apple monster'

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NEW YORK -- NBC Universal made good on its declared intent to pull all of its content from Apple's iTunes, following through during the weekend as its contract with the platform expired.

This comes as two separate research reports were published Monday about iTunes. One, from Forrester Research, said that Apple was the "loser" in this battle with NBC Uni, while another from Pali Research speculated that News Corp.'s Fox could soon add its titles to iTunes.

Pali analyst Rich Greenfield said in a blog post that Fox is "actively negotiating with Apple to begin offering new releases and catalog titles beginning in early 2008" on iTunes. Disney is the only major studio that offers its catalog on the platform, while Paramount, Lionsgate and MGM have partial catalog deals.

Greenfield said that the studios have been warming to iTunes because Apple "appears willing" to increase the wholesale price that it pays for movies. Disney has been receiving between $14 and $14.50 for its movies, said Greenfield, who postulated that the price could soon be raised to more than $15.

On the TV side, though, Apple and NBC Uni have been unable to work out a new agreement to sell network shows on iTunes. The companies' spat over what NBC Uni saw as low pricing, Apple's unwillingness to bundle network content and copyright concerns became public just before Labor Day as reports surfaced that the network wouldn't renew its contract with iTunes when the current deal expired this monthin December.

As the deadline passed during the weekend without a new deal, NBC Uni-owned content now no longer appears on iTunes. This includes current and previous seasons of "Heroes," "The Office" and "Battlestar Galactica."

Other current series that are produced outside of NBC Uni but air on its networks will remain on iTunes, including NBC's "Chuck," "Scrubs," "My Name Is Earl," "Journeyman," "Days of Our Lives" and Sci Fi Channel's "Stargate: Atlantis."

Before his keynote at Monday's UBS Global Media Conference, NBC Uni president and CEO Jeff Zucker told The Hollywood Reporter that nothing had changed between NBC and Apple. He said no formal discussions were happening between the companies.

"We'd love to be in business with Apple but it needs to make economic sense for us to do so," said Zucker, who noted that his company made $15 million in profit from iTunes last year. "Hopefully we can figure something out."

NBC Uni content remains widely available elsewhere on the Web, though.

In the days after the its negotiations with Apple became public, NBC said it will sell its content through Amazon's Unbox. Hulu, the joint Web video venture with News Corp. that launched in October, makes free streaming episodes of NBC Uni shows available on its stand-alone site and through the company's distribution partners, which include MySpace, Yahoo, AOL and MSN. NBC recently introduced a free download platform for its shows called NBC Direct, though it has been widely panned, and the network last week also announced a streaming deal with Netflix.

"Obviously these don't have the scale of Apple today," said Zucker, speaking at the UBS conference, "but we're already seeing that people are using them."

Forrester analyst James McQuivey said, though, that "any supposed backlash against NBC" from consumers because its shows are no longer on iTunes, "will not materialize" because of the prevalence of NBC Uni content on the Web.

The report goes on to paint a meager future for paid video downloads, industrywide, for Apple. While it has had great success with selling music on iTunes, McQuivey sees the video business as a different one, in which consumers have more choice and could likely look past Apple.

"For people who lack the extra dough and extra willingness to consume video in ways only a contortionist could love, the iTunes video store is a curiosity, not a game-changer," McQuivey said.

He pointed out that, on the TV side, there are many other ways to download or watch shows online without paying the $1.99 that iTunes charges. As far as films, McQuivey speculates that other studios are leery of jumping to the platform because they don't want to create an "Apple monster" or they have exclusive deals with other formats.
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