Explaining the Cozy Relationship Between Apple and News Corp.


This week's big product news fromApple (AAPL) was made possible in part by News Corp. (NWS), which agreed to make its TV shows available for rent at the ultra-low price of 99 cents per episode via the Apple TV device. While Disney (DIS) also went along with the pricing scheme -- no surprise, since Steve Jobs sits on the Disney board -- CBS (CBS), Viacom (VIA) and NBC Universal all held out, worried that show rentals could undermine their economic model. Why, one wonders, would News Corp. chief Rupert Murdoch -- who's made plenty of noise in the past year about the importance of getting paid in full for quality content -- come to a different conclusion?

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In fact, for two men who outwardly have little in common, save for spectacular wealth, Murdoch and Apple boss Steve Jobs are awfully simpatico these days. Murdoch has often gushed with admiration for the iPad, which he calls a "game-changer" that will revive the newspaper industry. That's in marked contrast to his stance toward the Kindle, whose maker, Amazon (AMZN), galls Murdoch with its stingy revenue split and refusal to share customers' data.

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Murdoch's Wall Street Journal is one of the only publications that already sells subscriptions to its iPad edition. Other publishers, like Time Inc. and Conde Nast, have waited in frustration for the same privilege, contenting themselves by selling single copies. And that's not the only special treatment News Corp. has received from Apple: There's also the latter's unexplained decision to approve The Sun's iPad app, which allows readers to see the full, uncensored content of that newspaper, nudity and all. Other apps featuring nudity, or even suggestive partial nudity, have been rejected on those grounds.

Shared Ambitions

For his part, Jobs was no doubt pleased when News Corp. abandoned vague ambitions to develop an e-reader of its own. Jobs' strategy of using other people's cheap content to drive sales of expensive Apple devices also dovetails nicely with Murdoch's historic willingness to engage in price wars with competitors he regards as less deep-pocketed, more susceptible to investor pressure, or simply less committed than he. For all his talk of the high value of content, he's always been willing practically give it away if that means inflicting pain on a rival, be it the New York Daily News or the London Telegraph. (The same goes for advertising.)

Rupert and Steve: a bromance for the ages.