Apple’s rumoured streaming TV service didn’t materialise because Eddy Cue made demands that would have upended decades of cable industry and Hollywood practices, people familiar with the discussions informed the Wall Street Journal.
In particular, Apple wanted to freeze for several years the monthly rate per viewer it would pay to license Disney channels. TV channels usually get annual rate increases and rely on them to fuel profit growth.
That prompted Disney — which was keen to strike a deal, since Robert Iger is an Apple director — to walk away from the negotiations table, just like 21st Century Fox and CBS, Because of this, Apple couldn’t unveil the rumoured streaming TV service last fall when it announced the revamped Apple TV 4.
As pointed out by the WSJ, Apple is eyeing television to reignite growth as its hardware sales — especially its bread and butter: the iPhone — are falling.
There is a problem though: media companies worry that by agreeing to Apple’s sweetheart terms could allow traditional cable-TV distributors to demand the same terms, therefore making their investments in original shows harder to recoup.
The key person in Apple’s TV matters is Eddy Cue, who is known for his hard-nosed negotiating style. As it turns out, the streaming TV service plan dates as far back as 2009.
Time Warner Cable approached Apple in 2011 with a plan to offer a joint TV service over an Apple set-top box to battle satellite and telecom rivals, according to the WSJ’s sources. Talks began with Glenn Britt, then CEO of Time Warner, and Cook also approached the head of Comcast and promised that the Apple TV and service would be offered exclusively through cable companies. The terms, however were Apple-like: $10 per month per subscriber and the company refused to rule out seeking an even higher share of each monthly subscription in the future, according to sources.
Three years later, the discussion stalled, and Apple changed direction again. This time it was hoping to put together a “skinny bundle” (you remember those rumours) delivered over the web.
After lengthy negotiations, Fox and Apple agreed on a rate for channels like Fox News and regional sport networks. Disney was moving toward licensing just a few channels. But ultimately they didn’t reach a final deal with Apple.
Mr. Cue has said the TV industry overly complicated talks. “Time is on my side,” he has told some media executives.
Now Apple is approaching TV with original programming — Planet of the Apps and the Apple TV set top box, which allows TV networks to develop apps and and is working to make those accessible through a single login. After Apple reported a profit slide Tuesday, Mr. Cook, the CEO, said the company’s TV efforts are just starting. “You shouldn’t look at what’s there today and think we’ve done what we want to do,” he said.