NBC shows return to iTunes after year-long feud

Apple Inc CEO Steve Jobs discusses his company's ''iTunes'' product at Apple's ''Let's Rock'' media event in San Francisco, California September 9, 2008.

LOS ANGELES (Hollywood Reporter) - Apple Inc. and NBC Universal have ended a year-long disagreement over pricing that had been keeping NBC TV shows off the iTunes Store.

Apple CEO Steve Jobs took the occasion of the company's "Let's Rock" event in San Francisco to announce that, beginning immediately, NBC shows including "Heroes" and "The Office" are available via iTunes for $1.99 per episode or $2.99 for high-definition (HD) versions.

Library titles will sell for 99 cents, and NBC will have the ability to group shows -- like Tina Fey's six favorite episodes of "30 Rock," for example -- at prices yet to be determined.

In September, NBC was the top seller of video content on iTunes, but the network pulled its shows off the service when Apple refused to let NBC fiddle with pricing.

Apple claimed then that NBC was angling to raise the price of some shows from $1.99 to $4.99 per episode, while NBC denied that it sought such a dramatic price hike.

Although some quickly hailed the arrangement as proof that Apple has the power in its relationships with content companies, NBC digital distribution president JB Perrette saw it differently.

After all, he said, the $2.99 price point for HD shows is new since the last time around, as is the ability to creatively compile groups of episodes and price them accordingly.

"We finally got what we wanted: pricing flexibility," he said. "In short order, we'll be back in our No. 1 position."

A year ago, NBC accounted for as much as 40% of the sales of TV shows at iTunes.

Perrette denied again that NBC had ever sought to increase the price of some standard-definition TV episodes by more than 150%.

"That was largely scare-mongering," he said. "We were looking for flexibility, not to gouge people."

Jobs said that iTunes boasts 65 million users and its video content includes 30,000 TV episodes.

Dennis Miller, a general partner at Spark Capital, called Apple's patched-up relationship with NBC "a case of mutual need, given NBC's library and the ubiquitous presence of Apple's platform."

Gartner analyst Mike McGuire predicted that the slightly increased flexibility that NBC negotiated could encourage its competitors do likewise. "It helps the content guys to create some tiers," he said.

NBC also said that it will offer free premiere episodes of five NBC shows a week before they are broadcast: "Knight Rider," "My Own Worst Enemy," "Kath & Kim," "Life" and "Lipstick Jungle."

Jobs also unveiled the new line of iPod digital music players at the event, including smaller, cheaper and more powerful iPod Nanos.

The display of new products and a rekindled partnership with NBC did little for Apple stock Tuesday, though. Shares fell 4% to $151.68.

Reuters/Hollywood Reporter