Viacom CEO: Apple's 99-Cent TV Rental Price Is Too Low

Viacom Inc. (VIA) Chief Executive Philippe Dauman said Thursday that his company opted not to participate in Apple Inc.'s (AAPL) new digital rental service for television shows because its 99-cent price tag for shows is too low.

"The 99-cent rental is not a good price point," Dauman said at an investor conference here. "It doesn't work for us."

Apple announced the new service along with a new version of its Apple TV device, and Walt Disney Co.'s (DIS) ABC broadcast network as well as News Corp.'s (NWS, NWSA) Fox signed on to make shows available in the offering.

Other national broadcast networks owned by NBC Universal and CBS Corp. (CBS), along with all cable networks, chose not to participate due to pricing and other strategic concerns.

"We value our content a lot," said Dauman, adding that Viacom invests heavily in producing its content and plans to increase that investment next year. "We don't think Apple has it quite right yet."

At the same time, Dauman hailed a recent digital distribution deal between Netflix Inc. (NFLX) and Epix--a movie network that is a joint venture between Viacom's Paramount Pictures, Lions Gate Entertainment Corp. (LGF) and Metro-Goldwyn-Meyer Inc. He said the five-year, billion-dollar deal amounts to an "inflection point" in the evolution of digital video because it's an example of a digital distributor paying top dollar for content--putting it in league with traditional distributors, like cable and satellite companies.

Dauman added, however, that Epix's deal with Netflix doesn't endanger its relationships with traditional distributors because it includes a 90-day lag time for the release of films after their release on pay-TV. Several studio and cable executives have recently disagreed with that assessment, saying the deal does encroach on the pay-TV business.

News Corp. owns Dow Jones & Co., publisher of The Wall Street Journal and this newswire.

Meanwhile, Dauman said Viacom is on pace to increase its third-quarter U.S. ad revenue at a faster rate than the 4% growth it reported for the second quarter, and he said he expects another increase in the growth rate in the following quarter.

-By Nat Worden, Dow Jones Newswires; 212-416-2472; nat.worden@dowjones.com

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