Standard definition episodes currently cost $1.99; Apple wants to bring that down to $0.99. It's unclear what Apple wants to do with prices for HD episodes, which cost $2.99.
Apple believes that $1.99 is more than a lot of people are willing to pay, and that the change would greatly increase sales, offsetting the loss of revenue from the price drop. Apple and TV networks probably don't see eye to eye, though; Apple's interest is in increasing sales through its online store, but the TV networks have stable and lucrative deals in traditional distribution. They're likely concerned that making digital sales more attractive would hurt their numbers on broadcast, satellite and cable.
Rumors circulated previously that Apple has been trying to get networks to sign on to a $30-per-month subscription agreement that would compete with cable and satellite plans, but we haven't heard anything new about that in a while. There's also a rumor going around that Hulu will launch a subscription-based service with an expanded selection of entertainment, so Apple might be concerned that its steep per-episode prices will make it difficult to compete.