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ENTERTAINMENT

NBC and Apple are back in tune

The network restores its shows to the online store after the firms end their price dispute.

September 10, 2008|Michelle Quinn | Times Staff Writer

SAN FRANCISCO — NBC Universal ended its battle with Apple Inc. on Tuesday, restoring some of the most downloaded TV shows to the iTunes store.

With the return of such series as "The Office," "Heroes" and "30 Rock," the companies ended a feud that erupted last September over Apple's insistence on a $1.99 price for all shows. Analysts said the two appeared to be meeting in the middle, with Apple agreeing to allow a little flexibility but not giving NBC carte blanche to change the prices of shows.

"NBC is coming back to iTunes," Apple Chief Executive Steve Jobs said during a news conference.

Jobs also announced a smaller, thinner version of the iPod Nano, the bestselling iPod, and a new version of iTunes that automatically groups similar music in one's library into playlists.

He also said a software fix was on the way for problems with the iPhones, including frequently dropped calls.

It was the first time Jobs had appeared in public since June, when speculation about his apparent weight loss prompted concern about his health. The Cupertino, Calif., company said then that he had been ill but was on the mend.

Bloomberg accidentally published an obituary of Jobs last month and then quickly retracted it, but not before bloggers picked it up.

Jobs looked largely the same Tuesday as he had in June, but he poked fun at the hubbub. He started the event by pointing to a statement on the screen that read, "The reports of my death are greatly exaggerated."

The new products and Jobs' appearance did little to slow Apple's recent stock slide. It fell $6.24, nearly 4%, to $151.68.

The rift with NBC had been seen as a sign of Hollywood's fear that Apple was amassing too much power in digital media distribution. At the time, NBC's cable networks supplied iTunes with three of its 10 bestselling shows, accounting for 30% of TV show sales.

The technology company said NBC had wanted to charge as much as $4.99 a show. NBC disputed Apple's claim and said it wanted to package shows together with variable pricing.

In September 2007, NBC said it wouldn't renew its contract to sell shows through iTunes. Apple responded by saying it wouldn't sell the network's fall shows.

A week later, NBC struck a deal with Amazon.com Inc. to sell show downloads. The following month, NBC joined with News Corp. to launch a competitor of sorts to iTunes: Hulu, an ad-supported service for watching free video online.

As part of the agreement announced Tuesday, some of which appears to apply to other TV networks, Apple will begin selling TV shows in high-definition for $2.99, a dollar more than for standard-definition shows.

Selected older catalog shows will cost 99 cents an episode.

In addition, NBC will sell an iTunes season pass that will give customers a show's entire season at a discounted price.

"That's what we were looking for," J.B. Perrette, president of NBC Universal's digital distribution division, said in an interview.

Over the last year, Apple has shown some increased willingness to experiment with different prices, such as by agreeing to sell shows from HBO and other premium channels for $2.99 an episode.

Although NBC doesn't gain significant revenue from iTunes, it's an important storefront that helps sell more iPods, analysts said.

"It's really hard to challenge the dominance that iTunes and iPods have in the market," Gartner Inc. analyst Van Baker said.

Also Tuesday, Jobs unveiled Apple's thinnest iPod Nano, which plays music and video, in advance of the fall season. It is available in nine colors and at lower prices: $149 for an 8-gigabyte version and $199 for 16 gigabytes.

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michelle.quinn@latimes.com

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