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Apple drops NBC before new season

Apple Inc escalated a dispute with NBC Universal over the pricing of TV shows by announcing it would not sell any of the NBC network's programs for this fall season on iTunes.

Earlier, NBC had told Apple that it would no longer allow its programs to be sold via iTunes at the end of the year.

NBC Universal-controlled TV programming accounts for an estimated 40 percent of the video downloads on iTunes.

"We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase," Eddy Cue, Apple's vice president of iTunes, said on Friday.

"We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers," he said.

STOPPING POINT

Rather than cut off NBC programs in the middle of the season, Apple decided to stop before the new fall episodes premiere next month, Cue said.

That would be a blow to fourth-place NBC, which could use the buzz provided by Internet sales for its programming -- not to mention the money.

But NBC insisted that Apple is contractually obligated to offer new episodes of returning programming, shows like Heroes and The Office, through the end of December. Apple could only refuse to sell new series like The Bionic Woman, it said.

ABC, CBS, Fox and the CW, and 50 other cable networks, have deals in place to sell fall shows at iTunes' current price of US$1.99 per episode, Apple said.

WHO SAID WHAT

Apple said that NBC wanted it to pay more than double the wholesale price for NBC material, which would have resulted in the retail price increasing to US$4.99.

NBC said it never asked to double the wholesale price of its programming.

It said it was most interested in the flexibility to package its programming at different prices.

"It is clear that Apple's retail pricing strategy for its iTunes service is designed to drive sales of Apple devices, at the expense of those who create the content that makes these devices worth buying," NBC Universal spokesman Cory Shields said.

NBC Universal has also partnered with News Corp to create a new video site, Hulu.com.

The company's contract to sell more than 1,500 hours of news, sports and entertainment programming on iTunes expires at the end of December.

NBC fulfilled its requirement to inform Apple by Friday if the contract would not be renewed, said Amy Zelvin, spokeswoman for NBC Universal Digital.

The dispute illustrates unrest among content providers over Apple's pricing policies.

Media companies want more say in pricing. Similarly, record companies would like to see an increase in iTunes' sales price of US$0.99 per song.
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