Apple in Negotiations to Rent TV Shows on iTunes

Apple Inc. is reportedly in negotiations with representatives from the major television networks for the right to begin offering a TV show rental service on iTunes. Although officials are refusing to comment publicly about the possible deal because talks remain ongoing, it is believed that Apple is seeking an agreement that will allow them to offer 48 hour digital rentals of popular shows for 99 cents each.

According to sources with knowledge of the situation Apple is talking with Disney, News Corp., Viacom, and General Electric, which own ABC, Fox, CBS, and NBC respectively, about a potential deal but there remain significant obstacles that may ultimately prevent an agreement from coming to fruition. Currently Apple offers TV content from several media companies for sale at an average price of $1.99 per episode, and there is a concern amongst executives at the companies involved that offering a more inexpensive rental service will significantly cut into those profits. Commenting anonymously on Apple’s proposal, one source from one of the major TV networks said, “”Right now, we’re against it. We don’t think it’s a good business model. Why cut your price?”

However, Apple’s plan may provide a more lucrative alternative to the free streaming services currently offered by the major media enterprises. Sites such as Hulu.com, a joint venture owned by NBC, Fox, and ABC provide free content, relying solely on advertising revenue to generate income. While these mediums have enjoyed a tremendous growth in popularity in recent years, industry analysts say that their potential for profitability is extremely limited as under their current business model the media companies typically earn only a few cents per streaming episode view.

Tom Adams, the president of the media research group Screen Digest Inc. believes that although it may hurt them in the short term, the major media providers will eventually accept Apple’s proposal. He said that shifting consumer tastes have already dictated the future of online content and that the company’s must accept that, “all of the free streaming options that have proliferated on the Internet have already brought to a halt the fast growth of the TV show sales business.”