Apple Making Progress On Plan To Kill The TV Business
Courtesy of Henry Blodget at The Business Insider
CBS and Disney are considering playing ball with Apple to offer online subscriptions to TV shows, the WSJ says.
Such a deal would have significant ramifications for the cable and satellite TV businesses, which will eventually be disrupted by something along these lines:
The proposed service by the maker of iPhones and iPod music players could, in at least some scenarios, offer access to some TV shows from a selection of major U.S. television networks for a monthly fee, according to people familiar with the discussions. Apple is pushing to complete licensing deals and hopes to introduce the service in 2010, some of those people said. It is unclear whether any networks have signed on yet…
If Apple signs up enough networks to launch a viable service—still a very big if—it could ultimately alter the economics of the television business. The service could undermine the big bundles of channels that cable, satellite and telecommunications companies, including Comcast Corp. and DirecTV Inc., have traditionally sold in packages to subscribers.
There are lots of details inthe WSJ article, which was written by Sam Schechner and Yukari Iwatani Kane. Some key points:
- News Corp., Viacom Inc., Time Warner’s Turner Broadcasting and Discovery Communications Inc. appear to be opposed to or leaning away from signing on to Apple’s service.
-
CBS is considering offering programs from the CBS and CW networks…Disney is considering including programs from its ABC, Disney Channel and ABC Family networks.
- In at least some versions of the proposal, Apple would pay media companies about $2 to $4 a month per subscriber for a broadcast network like CBS or ABC, and about $1 to $2 a month per subscriber for a basic-cable network.
These wholesale subscription prices are higher than the TV networks make from cable and satellite companies, which presumably makes Apple’s proposal tempting. That said, if Apple is successful, IP delivery could end up killing the golden cable and satellite goose. So the TV networks are understandably treading carefully.
The companies that have the least to lose are those that don’t make gobs of money selling bundles of good networks and bad networks for a bundled price–such as CBS. This probably explains some of CBS’s interest in the proposal.
All of this is a next step toward what will inevitably be the future of the TV business: Internet delivery of TV content. As we’ve argued, there is no way that today’s teenagers will pay $150 a month for 500 channels they don’t want to watch when most of what they do want to watch is a click or two away. So the traditional TV business is toast. It’s just a question of when and how.
See Also:
Sorry, There’s No Saving The TV Business
The Real Reason Brian Roberts Bought NBC
Hulu Is An H-Bomb Ready To Destroy The TV Industry
