Apple - How can I prevent iTunes from automatically downloading podcasts?

For anyone coming across this now, in the latest version of iTunes (~v12.5.1) it's much easier to prevent downloads for all podcasts you're subscribed to.

Steps:

1. Go to "Podcasts" in the menubar dropdown.
2. In the second column of your subscribed podcasts, at the bottom there's two buttons, "Refresh" and "Defaults...", click "Defaults..."
3. In the popup, set "Download Episodes" to "Off".

What you observe is the default setting for podcasts in iTunes, which is to download the most recent episode of a podcast.

To avoid this, follow these steps:

1. Go to Podcasts in the iTunes Library pop-up menu.
2. Select a podcast.
3. Right click and choose "Settings" (or alternatively, click on the gear icon next to the podcast title on the episode list on the right).
4. In the Podcast Settings dialog, under the "Settings for:" dropdown, select "Podcasts Defaults" (this would apply your changes to all podcasts).
5. In the "When new episodes are available:" dropdown, select "Do nothing" (the default option being "Download the most recent one").
6. Click OK.

With this change, iTunes will never download new episodes for any of your podcasts. If you wish to change this setting only for specific podcasts, you can do so by selecting the specific podcast in the "Settings for:" dropdown and/or by changing the defaults.