Apple at the Lions Gate

After six months outside, Apple (Nasdaq: AAPL  ) has entered the lion's den.

Lions Gate Entertainment (NYSE: LGF  ) confirmed Monday that it will be selling movies via the iTunes Store. Lions Gate joins Disney (NYSE: DIS  ) and Paramount in offering films via the increasingly popular downloading site.

Lions Gate's lineup is impressive, including the Terminator series from Calee-FOH-nya's governator. Others include the Saw franchise, Basic Instinct, Dirty Dancing, and -- one of my all-time favorites -- L.A. Story. (I'll take a half-caf decaffeinated half-caf with a twist of lemon, please.)

More than 150 titles are expected to make their way into the iTunes library this month. When they do, the store will have roughly 400 films available for download and purchase.

Yet as great as that is for Apple -- and as bad as it is for Netflix (Nasdaq: NFLX  ) and Blockbuster -- this deal isn't really news. Foolish colleague Alyce Lomax wrote of how Lions Gate discussed a deal with Apple in August. Now we're both wondering what the heck took so long to get it done.

No one's saying, but my theory is that Lions Gate waited because it didn't want to price its films as low as $9.99 a pop, the way Disney does. If I'm right, it wouldn't be surprising. Not because I'm prescient or anything, but because Wal-Mart (NYSE: WMT  ) made a stink when the rumor was that Apple would sell movies for $14.50 -- it's now $14.99 -- undercutting Wal-Mart, which pays $17 per new DVD release.

Then there was Target's (NYSE: TGT  ) fit over DVD prices. So miffed were executives at the discount retailer that they sent a letter to studios demanding the same cut-rate deal offered to downloaders like iTunes.

Studios, too, have been reluctant to give Apple pricing freedom. That's why Disney was the sole supplier of flicks for months. But now Apple CEO Steve Jobs seems to have won the day -- the downloadable edition of T2 is selling for $9.99 at iTunes as I write.

That brings me back to Apple. Lions Gate may not be Sony (NYSE: SNE  ) or Universal, but it's still a major Hollywood player. And it couldn't do a thing to move CEO Steve Jobs off his cut-rate pricing crusade for movies and music. Frankly, I'm not sure anyone can.

So, let's just call this deal what it really is: more proof that Apple is becoming the heaviest of the new Hollywood heavies.

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Fool contributor Tim Beyers, ranked 1,569 out of more than 22,500 in the Motley Fool CAPS investor intelligence database, didn't own shares in any of the companies mentioned in this story at the time of publication. All of Tim's portfolio holdings can be found at his Fool profile. His thoughts on growth stocks, Foolishness, and investing in general may be found in his blog. Disney and Netflix are Stock Advisor picks. Wal-Mart is an Inside Value pick. The Motley Fool's disclosure policy is the lion of Wall Street.


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