NBC Universal decides not to renew TV show deal with Apple’s iTunes Store

Apple iTunes“NBC Universal, unable to come to an agreement with Apple on pricing, has decided not to renew its contract to sell digital downloads of television shows on iTunes,” Brooks Barnes reports for The New York Times.

“The media conglomerate — which is the No. 1 supplier of digital video to Apple’s online store, accounting for about 40 percent of downloads — notified Apple of its decision late yesterday, according to a person familiar with the matter who asked for anonymity because negotiations between the companies are confidential,” Barnes reports.

“A spokesman for NBC Universal, part of General Electric, confirmed the decision, but otherwise declined to comment. A spokesmen for Apple declined to comment. The decision by NBC Universal highlights the escalating tension between Apple and media companies, which are unhappy that Apple will not give them more control over the pricing of songs and videos that are sold on iTunes,” Barnes reports.

“NBC Universal is also seeking better piracy controls and wants Apple to allow it to bundle videos to increase revenue, the person familiar with the matter said,” Barnes reports.

MacDailyNews Note: Please see related article: NBC: Apple’s iTunes, iPod powering broadcast ratings for ‘The Office’ – January 17, 2006

“In July, the Universal Music Group of Vivendi, the world’s biggest music corporation, said it would not renew its long-term contract with iTunes. Instead, Universal Music said it would market music to Apple at will, which would allow it to remove its songs from iTunes on short notice,” Barnes reports.

“The action by Jeff Zucker, NBC Universal’s chief executive, will not have an immediate impact on iTunes. The current two-year deal extends through December, so a vast video catalog — some 1,500 hours of NBC Universal’s news, sports and entertainment programming — will remain available on iTunes at least until then,” Barnes reports.

“The two companies could still reach an agreement on a new contract before their current deal expires. While each side has so far refused to budge, the talks will continue and have been free of acrimony, the person familiar with the matter said,” Barnes reports.

Full article here.

Welcome to big league hardball!

Please note that the shows are all still available on the iTunes Store. The threat of their removal and the leak to the press is simply a negotiating tactic initiated by one side or the other.

We doubt the shows will ever be removed. [UPDATE: 12:08pm EDT: Apple has pulled all NBC content from iTunes Store as of September 1st. The battle is on!]

We would not bet against Steve Jobs to come out on top in tough business negotiations.

51 Comments

  1. MDN Take:

    “Please note that the shows are all still available on the iTunes Store”

    Of course, if I recall correctly, they have contract until December. Let’s see what happens then, shall we? Did you expect an inmediate massive content withdrawal?

    Possibly they are trying to see if Apple backs its position in order to offer other conditions. Have to agree there

  2. NBC has got it all wrong. Apple is the villian of price control:

    the Office, season 1 & 2: total of 28 episodes

    itunes: $55.72 ($1.99 episode)
    wal-mart (per thier website): 39.87 ($1.42 episode)

    Also, with itunes thier is no production cost or cost of materials. So, big bad low price slinging Apple is way more expensive than Wal-mart. Hmm, I don’t hear NBC complaining that Wal-mart is playing hard ball. Losers.

  3. go fig, NBC <i>universal<i> is trying to pull their stuff from iTS. who’da thunk it?!?

    why is it that all these companies seem to be so gun-ho about trying to take down something successful by Apple, but don’t seem like they wanna do the same for anything M$?? “we’re gonna pull away from iTS and start using M$ media player (or anything M$ for that matter) b/c this iTS is just getting to be way too popular.” nevermind mediocresoft has been doing what they are claiming Apple is doing now for years. i know 2 wrongs don’t make a right, but why is it so horrible when Apple does something like this, but none of the companies seem to care that M$ is doing it?

    dumb, just dumb

  4. Apple knows what makes its store successful for consumers, and it will be careful to make in making any changes that move away from that.

    Here are some nuggets to connect:
    1. Outside of the TV set, people pick the playback device before they pick the store. (We don’t get all excited about buying iPods, iPhones and AppleTVs because we want to use the iTunes Store.)
    2. Apple makes about 30% profit on each iPod/iPhone, and maybe 2% profit on each episode. Obviously Apple primarily sells content in order to drive sales of devices.
    3. The iPhone can access the web. A rumored iPod wifi will be able to access the web. So iPhones and iPods will soon be used to watch content from any “network portal”. It doesn’t seem to me that Apple will block that. So obviously the value proposition of the iTunes Store is that it is easier to use than anything else.

    So whatever NBC is asking for is beyond what Apple wants to do to its customers and its iTunes store. Since NBC is complaining about pricing and DRM, that means it could be higher prices, variable prices, more draconian DRM, etc. The leak about a bundling disagreement seems disingenous – iTunes already does bundling, where you buy one thing and you get a bonus thing; so it’s clearly the higher pricing aspect that’s the holdup.

    Bye Bye NBC.

  5. @Tom Riddle

    wal-fart is horrible in their on right. they put the company my dad worked for (as well as many, many others) outta business due to their outragious price demands. the co. my dad worked for (much like many others) put way too much emphasis on their wal-fart client and neglected other clients—to meet wal-fart’s demands. too much was lying on wal-fart and once they were making nil on profit with them, they couldn’t drop ’em cus they were nearly the only client they still had. eventually wally world dropped them.

    that’s just stoopid business practice imo. but wal-barf is partially to blame for it also.

    but you’re right, you don’t companies sueing and complaining about them.

  6. I watch almost no television because most of it is crap and I will not schedule my life around when a TV show is on. So, I get what I watch via iTunes or netflix. I bought a season pass to BSG last year and probably will again this year, if its offered. If not, then I won’t be watching. NBC will lose all revenue from me. Their loss.

  7. Look at it this way. Imagine the deals Apple can get when NBC Universal comes crawling back on their hands and knees.

    What is the particuliar diseas that afflicts these companies? No One, and I mean no one has had the mindshare or market sucess with digital media downloads that Apple has. No one. So where did Universal get the idea that they can match Apple’s success starting from scratch? And in light of that success, when Apple tells them that consumers will balk at variable pricing, shouldn’t the companies in question be listening?

    Far, far too many of the people managing entertainment companies have inflated egos. Hopefully their incipient failure will will take the air out of some of these heads.

  8. I have two choices, steal or buy from iTiunes.

    NBC Universal, thanks for lowering the cost of acquiring your content.

    It’s not like Universal has produced much lately that is worth acquiring anyway, it merely hurts Apples bragging rights.

    Bye bye NBC Universal

  9. Ahah! Perhaps all of you nay-sayers will soon be reconsidering my idea for the portable VCR and shortwave radio that connects to one’s iPod and alternately folds to the size of a common pack of gum when not in use!

    I await your collective apologies.

  10. Let’s see, NBC wants more control (ability to raise the price) and bundle content together (force you to buy other content you don’t want in order to get what you do want) and Apple is fighting against that.

    Who do you want to support?

  11. MSNBC is a joint venture between Redmond and GE. MSNBC and other NBC sites have long been Mac unfriendly. Just yesterday when browsing with the Safari Beta, I was prompted to open FireFox to see on the MSNBC site. Steve should call them out on his next CNBC visit on this nonsense.

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