Apple (NSDQ: AAPL) has dropped its TV subscription plans — for now — but the company may be closing in on deals to offer 99-cent video rentals from at least one broadcast network and possibly two in time for an anticipated September re-launch of Apple TV. To succeed, the new version, being referred to as iTV, needs a constant supply of fresh premium content priced as a discount alternative to multichannel pay TV. The pitch, whether it’s explicit or implicit: pick what you want to watch and pay less to do it.
The broadcast networks most likely to take part are ABC (NYSE: DIS) and Fox; paidContent has confirmed discussions with the two networks are serious but details are still being worked out. Execs for each network declined comment. (The Fox negotiations and rental option were first reported by Bloomberg.)
It’s not clear how much programming either network would offer or the precise terms beyond a two-day rental at just below a dollar. Disney CEO Bob Iger has been willing to step out in front before to be part of an Apple launch like the iTunes video store and the iPad. He also has been willing to experiment with broadcast content, including putting ABC’s prime-time slate on its own player and on Hulu after joining the video portal as an equity partner. (Disney’s largest single shareholder is Apple CEO Steve Jobs.)
The rental option, similar to the one already offered for movies, is a compromise from Apple’s original proposal that episode downloads be priced at 99 cents. One network executive told me at the time that they couldn’t see any reason to slice sell-thru prices for new shows in half. But this option, while it might cannibalize some sales, could wind up expanding a network’s relatively small digital revenues and at the very least will give the networks a better picture of consumer behavior. As another exec said today, “Everything we’re trying right now is still experimental.”
Fox and ABC already make prime-time programming available for free, usually 24 hours after it premieres, keeping episodes up on their own sites, Hulu and other locations in limited batches. They both are part of subscription plan Hulu+ and both sell season passes and episodes through various online stores. A rental plan could encourage impulse shopping, particularly if it includes episodes after they move out of the free players and if it provides one-click living-room viewing.
A subscription package would have solved a lot, if it had enough of the right shows and movies. One simple price, whether it was $15 or $30, is a lot easier to compare to the cable or satellite bill than a mashup of single episodes and season passes. But Apple wasn’t close to getting the kind of content needed to justify that kind of monthly fee and any subscription package it could produce likely would need supplements like Netflix (NSDQ: NFLX) and more iTunes passes.
Hulu+ has NBC, ABC and Fox primetime shows from its equity owners News Corp. (NSDQ: NWS), NBC Universal (NYSE: GE) and Disney for its core programming, along with a limited selection of movies and documentaries. It runs $10 a month; a subscriber who doesn’t want live TV or comprehensive programming could add Netflix for a similar price and a season pass or two from Amazon (NSDQ: AMZN), iTunes or Zune and still come out ahead.
None of these options offer the same kind of one-stop TV programming cable or its multichannel competitors provide. They work best for people committed to certain shows or who prefer certain broadcast networks. Cable networks are more limited; many hold back full-episode programming from free players or from pay offerings that might be perceived as competition with the source of their biggest paychecks. A source from one major cable programmer told me today they have no interest in changing strategies to include Apple’s rental plan.
They also are competing with the pay TV cross-platform push, also known as the “TV Everywhere” approach, including efforts like HBO To Go, which is headed to iPad, and the just-launched Dish Online. AT&T (NYSE: T) U-Verse and Verizon FiOS are adding device viewing, while cable operators like Comcast (NSDQ: CMCSA) and Cox are expanding viewing options.

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