Apple's Aggressive Negotiations for TV Streaming Service May Have 'Backfired'

Apple's aggressive negotiations with cable providers and networks for a TV streaming service may have 'backfired', according to a WSJ report.

The company's efforts to develop a TV product have been spearheaded by SVP Eddy Cue who is known for his hard-nosed negotiating style summed up as "We're Apple".

In 2009, Apple began considering a subscription streaming-TV service. They offered higher fees than pay-TV providers for broadcast channels but only wanted certain channels so efforts fizzled.


Two years later, Time Warner Cable suggested a joint TV service over an Apple box which would help the company compete with satellite and telecom rivals. Negotiations started and Apple also approached Comcast about participating. Apple wanted payments of $10/month per subscriber and refused to rule out asking for a higher share of revenue in the future. It also wanted users to login with their Apple ID but wanted Time Warner Cable and Comcast to handle billing. As usual, Apple was reluctant to share data on what the user interface would look like and how users were navigating the channel menu.

Apple also wanted full on-demand seasons of hit shows and rights to a cloud-based DVR that would store top programs and allow ad-skipping in newly aired shows.

A former TWC exec tells that WSJ that TV-channel owners “kept looking at the Apple guys like: ‘Do you have any idea how this industry works?’ ”

As discussions grew cold, Apple changed directions. In late 2014, the company began trying to assemble a 'skinny bundle' of channels delivered over the Internet.


Apple began pitching Disney, Fox, CBS, and other companies on a streaming TV service which would include 25 popular channels, anchored by the broadcast networks. They wanted access to full current and past seasons of hit shows and some global rights so the service could be launched in additional countries. Apple also asked the big broadcast networks to put together deals with local TV station owners. Those deals are typically negotiated by cable and satellite companies.

Working backward from a desired $30/month retail price, Apple estimated that Disney's programming was worth $13/month per subscriber and asked them to pick which networks would be included. Disney executives worried that agreeing to Apple's terms would entitle other distributors to the same treatment. Additionally, Apple refused to allow channels from A+E Networks which is partially owned by Disney.

In the summer of 2015, Apple and Fox agreed on a rate for channels like Fox News and regional sports networks and began contract talks. Disney was moving towards licensing just ABC, ABC Family (now called Freeform), Disney Channel and WatchESPN, but didn't reach a final deal with the company. Time Warner wants Apple to include more content and charge more.

As of now, Apple has yet to be able to launch a TV service but Cue says the TV industry overly complicates talks: “Time is on my side.”

More details in the full report linked below...

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