NBC's Zucker: Apple Turned Dollars into Pennies
October 29, 2007: 4:43 PM ET
It's been two months since Apple (AAPL) and NBC Universal (GE) broke up over video pricing on iTunes, but the wounds don't seem to have healed -- at least for Jeff Zucker.
Variety reports today that NBC's CEO let loose on Apple in a breakfast interview with The New Yorker's Ken Auletta at Syracuse University. Zucker claims that NBC -- Apple's single largest video partner -- made only $15 million in iTunes sales in the past year. That's about 1/3 of what outsiders had estimated and far less than the entertainment giant is used to pulling in from hit properties like The Office and 30 Rock.
"We don't want to replace the dollars we were making in the analog world with pennies on the digital side," he said, according to Variety.
But in describing the negotiations that led to an impasse in August, Zucker repeated claims that Apple has already contradicted, specifically:
- that NBC Universal represented 40% of Apple's iTunes video content (Apple claimed in a press release it was only 30%)
- that its demands were modest: to raise the price of one show -- any show -- from $1.99 per episode to $2.99 (Apple claimed NBC wanted to hike the per-episode cost to $4.99)
Zucker also suggested that NBC was asking for something Steve Jobs is unlikely to give any media partner: a cut of his iPod sales.
"Apple sold millions of dollars worth of hardware off the back of our content and made a lot of money," Zucker said. "They did not want to share in what they were making off the hardware or allow us to adjust pricing." (link)
NBC's iTunes contract with Apple expires in December and from the tenor of Zucker's remarks, renewal doesn't seem likely. "We know that Apple has destroyed the music business – in terms of pricing – and if we don't take control, they'll do the same thing on the video side," he told the breakfast audience, according to FT.com.
NBC and News Corp., meanwhile, are set to launch Hulu.com, their bid to offer studio-produced video on the Web that's supported, like broadcast TV, with advertising. Hulu is handing out beta subscriptions here, if you want to give it a try.
See What iTunes Looks Like Without NBC and Apple to NBC: Drop Dead
