ambition to be a dominant player in television is
expected to accelerate the unraveling of the pay-TV
tech giant is in negotiations with major television
companies to offer a "skinny" package of
channels that would include ABC, CBS and Fox
Broadcasting, according to people familiar with the
matter who were not authorized to speak publicly. Apple
wants to roll out the service in time for the new fall
shows in September.
proposed streaming service takes aim at the 10 million
homes that have high-speed Internet and no pay
television programming, along with customers who are fed
up with high cable fees. Apple’s cachet and legions of
loyal fans could make it one of the biggest threats yet
to cable and satellite operators.
remains one of the few companies in the world that has
the potential to transform the TV industry, and we
believe consumers are ready for a change," Cantor
Fitzgerald analyst Brian White wrote Tuesday in a
company is the latest to stake its claim in the
fast-growing market of Internet television services.
and Amazon.com already offer subscription services, and
Sony Corp. plans to launch its own TV offering for its
PlayStation game console. Dish Network last month rolled
out its Internet-delivered service called Sling TV that
starts at $20 a month.
last week unveiled its deal to offer HBO Now, a
$14.99-a-month Internet streaming service on Apple
devices beginning next month. Its planned Web TV
subscription service would cost customers about $30 a
month, the people said.
new subscription service ultimately would be designed to
spur sales of the company’s Apple TV device, which
some consumers could use to replace their cable box.
Last week, Apple Chief Executive Tim Cook slashed the
price of the device to $69 from $99.
recent moves should help prompt cable and satellite TV
providers to offer their customers smaller packages of
services at lower price points to remain competitive.
Consumers for years have been grousing about the high
cost of subscriptions that include hundreds of channels
they never watch.
floodgate is now open," CBS Chief Executive Leslie
Moonves said during a recent investor conference.
"Clearly the bundle is changing. … The days of
the 500-channel universe are over."
years of false starts, Apple finally is getting traction
with programmers that previously rebuffed its overtures.
These programmers, including CBS and Fox, don’t want
to get left behind as consumers find ways to cut through
the cable clutter.
is willing to pay up to provide the channels — and
that makes business sense for the programmers in an era
of declining ratings and ad revenue.
CBS, ABC and Fox on Tuesday declined to comment on
discussions, which were first reported by the Wall
was unclear Tuesday exactly which TV networks would be
included in the proposed Apple service. Apple is said to
be focusing on deals with companies such as 21st Century
Fox that own both a major broadcast network and cable
is not in discussions with Apple. However, as part of a
2011 agreement with the federal government, NBC’s
parent company, Comcast Corp., is legally obligated to
provide its programming to Internet services if NBC’s
rivals also participate.
new service also might not include regional sports
channels, which have helped drive up the cost of pay TV
in recent years.
analysts are not ready to write the obituary for the
pay-TV industry just yet.
are going to see an increase in cord cutting, but it’s
not going to be dramatic," predicted James McQuivey,
an analyst with Forrester Research. "The main
reason it won’t be dramatic is there is no way to cut
the cord and still get everything you want."
example, Dish’s Internet streaming service, Sling TV,
offers ESPN, ABC Family, Cartoon Network and Food
Network — but not ABC and CBS.
introduced the service last month to appeal to
budget-conscious consumers and apartment dwellers unable
to install an antenna on their roof. Sling TV, which
starts at $20, allows consumers to add packages like
sports and lifestyle programming for an additional $5 a
point out that the low cost might be deceiving.
still would have to turn to cable and phone companies
for their Internet service, some of which tack on fees
if users exceed established data caps. This could be
easy to do when users are spending hours streaming TV
shows and movies.
TV distributors also are expected to fight back by
making their bundles of Internet and TV channels
"economically attractive as a way to retain
consumers," Nomura Securities analyst Anthony
to a broadband-only package might save customers about
$30 to $50 a month at current promotional rates, but
adding Apple’s Web TV Service, Netflix and HBO Now
"quickly erodes those savings," DiClemente
companies already have gotten the memo.
example, Comcast has a promotional Internet service plus
TV package for about $40 a month. The slimmed-down
package has 25 channels, including ABC, CBS, NBC, PBS
Communications, which provides cable service in Orange
County, has a low-cost option that includes high-speed
Internet, basic TV channels and premium networks HBO and
Starz at a promotional rate as low as $69 a month.
has had a slow march into TV. When it was launched in
2007, the Apple TV box was billed as a way to purchase
movies and TV shows from iTunes and display it on a
television set. At the time, broadcasters showed little
interest, objecting to the a la carte nature.
now, ESPN, Bloomberg TV and others offer content that
can be seen live through Apple TV apps.
persistent rumors about manufacturers in Apple’s Asian
supply chain revving up Apple-branded television sets,
neither a display nor a newly designed Apple TV
streaming box has appeared on the shelves.
current Apple TV device is capable of streaming dozens
of channels, but the recent price cut for the box has
stoked speculation that a new version could debut later
newer box might handle ultra-high-definition resolution,
which provides a step up in picture quality. Experts
think that Apple’s advantage comes from its strong
track record of developing products that have clean and
do have this very loyal fan base and a great usability
that’s not possible in the more fractured environments
of other devices," said Field Garthwaite, chief
executive of Iris.Tv, a Los Angeles start-up that builds
video recommendation technology.