Apple tuning in 99-cent iTunes TV show rentals

Apple (NASDAQ:AAPL) is reportedly in talks with broadcast television networks ABC, CBS, Fox and NBC to offer 99-cent TV episode rentals via the computing giant's iTunes digital storefront. Citing three sources familiar with the negotiations, Bloomberg reports Apple is proposing commercial-free episode rentals spanning 48 hours, optimized for devices including the iPhone, iPod touch and iPad; programming would become available on iTunes within 24 hours of its original network broadcast. iTunes presently offers feature films for rental and purchase, but no rental option exists for television programming. "This takes Apple out of the position of making consumers decide to either buy or not view," said Altimeter Group analyst Michael Gartenberg. "It makes Apple much more competitive with services like Hulu." Apple said it does not comment on rumor or speculation--representatives from the four networks also declined comment.

Sources tell Bloomberg the a la carte iTunes rental service negotiations follow in the wake of an abandoned Apple proposal to launch an iTunes TV subscription service, an initiative that would have jeopardized the networks' existing revenue deals with cable providers like Comcast and Time Warner. At present, ABC, CBS, Fox and NBC receive about $250 million annually in broadcast retransmission fees industrywide--RBC Capital Markets analyst David Bank said that number is poised to grow to several billion dollars within the next five years. "If you're running a TV network, you don't want to upset the existing ecosystem broadly by starting a rival subscription service with Apple," Bank said. "You want to look for ways to drive incremental revenue."

Apple is slated to formally announce the iTunes TV rental option during a media event in San Francisco on Sept. 7, roughly two weeks ahead of the network's fall season kickoff. Sources also indicate Apple will additionally unveil an upgraded iPod touch unit boasting a higher-resolution screen comparable to the new iPhone 4 as well as a $99 version of its Apple TV set-top box enabling users to stream content from iTunes.

For more on the iTunes TV rental service:
- read this Bloomberg article

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