HBO seen selling shows on Apple's iTunes

By Kenneth Li

NEW YORK (Reuters) - Time Warner Inc's (TWX.N: Quote, Profile, Research, Stock Buzz) HBO cable network is expected to start selling shows on Apple Inc's (AAPL.O: Quote, Profile, Research, Stock Buzz) iTunes digital entertainment service, with flexible pricing, sources familiar with the discussions said on Monday.

Episodes of some HBO shows are likely to be sold at the standard price of $1.99 per episode or higher, these sources said, marking the first time Apple has agreed to selling television shows at different prices in the United States.

The deal could be announced as early as Tuesday, one of the sources said.

Although some global iTunes stores, including Japan, already sell songs at different prices, Apple has resisted offering music or television shows at different prices for the sake of simplicity for consumers.

But studio and music company executives have pushed for variable pricing, such as the ability to sell some content at lower prices and new releases at higher prices, which they believe would improve sales from its older catalogs.

Apple's pricing structure also was part of the reason why General Electric's (GE.N: Quote, Profile, Research, Stock Buzz) NBC Universal decided last year to pull its shows from iTunes.

Since then, NBC has made some shows available for streaming on Apple's iPhone as well made some available for sale on iTunes's U.K. store.

For HBO -- home to hit series like "The Sopranos" and "Sex and the City" -- the move marks the first time it has made its shows available for sale in electronic form. It is currently testing a broadband service for subscribers in Wisconsin, which streams episodes of shows shortly after their first airing.