NBC Universal has cancelled its iTunes contract and will withdraw the television shows it currently offers through the service in December, when the current contract expires.

This is a blow to Apple's digital media service, because NBC Universal supplies 40 per cent of iTunes video downloads in the US, including The Office and Battlestar Galactica, reports the New York Times.

The decision to withdraw the content follows disagreements between the two firms. Apple is thought to have rejected NBC's demands for more restrictive DRM and the introduction of flexible pricing.

Apple was informed of NBC Universal's decision late last night.

Apple has since commented on the decision in a press statement: "The move follows NBC's decision to not renew its agreement with iTunes after Apple declined to pay more than double the wholesale price for each NBC TV episode, which would have resulted in the retail price to consumers increasing to $4.99 per episode from the current $1.99. ABC, CBS, FOX and The CW, along with more than 50 cable networks, are signed up to sell TV shows from their upcoming season on iTunes at $1.99 per episode."

"We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase," said Eddy Cue, Apple's vice president of iTunes. "We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers."

The news follows continued reports of conflict between Apple and Universal Music, a conflict which has seen the latter company refuse a long-term iTunes contract for music distribution.

Universal Music also recently began selling its music catalogue DRM-free through a series of online music stores - but not iTunes.