Even rumors that Apple (NASDAQ:AAPL) may enter a market send waves of excitement through consumers and fear through the existing players in the field.
The idea that the company plans to launch a streaming TV service designed to take on cable and appeal to cable customers certainly fit that bill. Many expected the company to announce the pay-TV alternative in June at its Worldwide Developers Conference alongside new Apple TV hardware.
Neither of those things happened but the company has been quietly maneuvering behind the scenes to make the deals needed to launch a pure-digital cable-like product. Those efforts, which have been reported as imminent since June, still have not been announced.
Now, at least for the streaming TV service, the reason has become public and it suggests that the company may not be able to bring its cable alternative to market any time soon.
Content owners are balking
Apple appears to be building a service that is somewhere between current cable lineups with their bloated channel count and DISH Network's (NASDAQ:DISH) Sling TV which offers around 20 channels for $20. To make that happen the company needs to make favorable deals with the broadcast networks and popular cable channels.
To do that the company must pass two hurdles. First, it likely needs content owners to charge less than they traditionally do. Apple also needs to make deals that don't require it to pay for (and thereby charge for) channels it does not want. That means it may make an offer to carry ESPN at a certain price, but it may not want ESPN2 or the other channels in that family at any price.
Apple has not been able to make those deals, according to a report from Bloomberg and that has forced the company to push its launch date back from September to an unnamed date in 2016.
Why are content owners balking?
There are some concerns over Apple's ability to technically deliver the service but the real problem is price. Apple wants to charge $40 a month for its cable-like package, the financial news service reports and to do that it needs to pay lower prices than traditional providers. Bloomberg explained why that is proving to be a stumbling block.
The TV programmers expect to receive more, not less, money from new Internet-based services like Apple than from existing cable and satellite TV partners, because they're new to the market and are seeking to gain share. Talks with CBS, Fox and NBC, owned by Comcast Corp., have been mired for the past several months, said the people. The prospect of a new player willing to pay for their networks is particularly appealing to media conglomerates, given the declining number of pay-TV subscribers.
This is not a new problem for Apple. It faced similar issues with the music industry when it launched iTunes and again recently when it launched its Apple Music subscription service.
Will Apple prevail?
Ultimately there is every reason to believe Apple will be able to make the needed deals though probably at higher prices than it wants to pay but lower ones than the content owners are asking for now. This is a slippery slope for cable and broadcast networks because they want to keep some revenue from cord cutters but they do not want to let Apple create a service so compelling that it speeds up people dropping traditional pay TV.
Of course, the networks and cable channel know their model is changing and ultimately it makes sense to be in business with Apple. It's a a case of protecting some revenue versus watching it all disappear as more people cut the cord.
It's not going to happen as fast as Apple wanted, but it's hard to see how the company won't eventually make its streaming live TV service happen.
Daniel Kline owns shares of Apple. He still pays for traditional cable. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.