Apple, Fox eye iTunes movie rental deal
December 28, 2007

Apple and Twentieth Century Fox are set to announce a deal that will allow consumers to rent Fox movies through Apple's digital iTunes Store, according to media reports Thursday. The agreement will allow rentals of Fox's latest DVD releases by downloading a copy from the online iTunes store for a limited time, the Financial Times said. The Wall Street Journal also reported the deal in its online edition.

Fox's corporate parent, News Corp., had no comment. An Apple spokesman could not be reached for comment. The reports sent shares of Netflix, a leading online DVD rental company, and Blockbuster, the largest U.S. movie rental chain, down nearly 5% in morning trade.

Analysts were divided about what impact the Apple-Fox deal would have on the $9 billion U.S. movie rental business, which has seen steady declines in in-store rentals and slowing growth online in the past year. Pali Research analyst Stacey Widlitz said the deal follows a trend of Hollywood studios selling directly to consumers and "cutting out the middleman."

"It's just a sign the studios feel ... that another distribution channel is where they are choosing to go, and incrementally it hurts Blockbuster and Netflix," Widlitz said. However, Wedbush Morgan analyst Michael Pachter said the deal probably would expand the universe of online renters.

The Hollywood Reporter/Reuters
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