News Corp. expected to allow TV show rentals for 99 cents

2nd September, 2010 by adina
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According to LA Times, the TV shows’ future on iTunes and perhaps the future of TV itself depend on the decision News Corp. will make whether or not to back Apple to offer 99 cent show rentals. The TV rental industry has been wrestling with Apple’s initiative for several weeks, because although expected to generate a large number of downloads, it could, on longer term, jeopardize the economic model utilized for financing modern TV shows. It is a fact now that Disney seems to be onboard, while other companies, like Time Warner, CBS and NBC Universal, are on the opposed side.

News Corp. is the major undecided partner in this deal, as not all of its executives agree Apple’s plans. Those who are opposed to the idea claim that 99 cent rentals would decrease DVD sales and would simultaneously make people to quit network TV, i.e. a market which is driven by advertising with a total value of $20 billion. However, the pro side, lead by CEO Rupert Murdoch, believe that a positive impact would appear on other News Corp. divisions and they mean mainly newspapers.

News Corp. hopes to be able to obtain favorable terms. Murdoch has said that the iPad would save print media and attract people who would not subscribe to a newspaper under normal circumstances. News Corp. is believed to prepare the launch of a national digital newspaper by the end of 2010.

Apple sees cheap TV rentals as a source of reviving video sales on the iTunes, as these ones have crawled since 2008. Services like Hulu have seriously hurt them as the cost for the public is only associated to exposure of advertising. Apple executives try to convince Hollywood that 99 cent rentals would be able to double the amount of current transactions.

The company is believed to run a pricing trial during six months, in which it would guarantee that the networks receive the same amount of revenue as that generated by higher prices. Apple would require in exchange commercial-free versions of the most popular shows to be presented within 24 hours after the original broadcast.

The alternative of harming syndication sales is another concern in the TV industry. They represent up to $2 million per episode for Warner Bros. another suggestion the executives make is that discounted TV rentals would convey a wrong message when trying to get payment for cable companies to obtain the retransmission right of network TV.


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