Is Wal-Mart Threatening to Kneecap Studios that Do the Download?

The NY Post alleged yesterday that Wal-Mart had been pressuring studios not to make their movies available on Apple's iTunes Music Store. Tim Arango writes:

Last year when Disney announced it would begin offering episodes of the hit shows "Lost" and "Desperate Housewives" on Apple's iTunes, the reaction of the world's largest retailer sent shockwaves through the entertainment industry.



Wal-Mart, worried that offering the shows for viewing on iPods would cut into DVD sales at its stores, sent "cases and cases" of DVDs back to Disney, according to a source familiar with the matter.



Now, following Apple's entrance in to the business of selling full-length films for download, the battle between Hollywood and its largest client is getting uglier, as studio executives say Wal-Mart has overtly threatened to retaliate if they go into business with Apple.

Wal-Mart disputed the report, though, in this Reuters piece:

"Customers want to watch movies, and they want to be able to make the choice when and how they want to view them," a Wal-Mart spokeswoman said.



"While we recognize there are various current and potential providers of this service, we are not dissuading studios from conducting business with other providers."

What's your bet: how long will it take Wal-Mart to dive into the digital download business itself? I'm guessing it won't happen until 2007, and that a Wal-Mart download marketplace won't make much of a dent, just as the company didn't succeed in the DVD by mail business.