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Apple's 'Hard-Nosed' Negotiating Tactics Leading to Trouble in Television Market
According to The Wall Street Journal, Apple started talking with the Walt Disney Company in early 2015 about getting Disney-owned content onto its then-planned streaming television service, but Apple executives, iTunes chief Eddy Cue in particular, made demands networks were not prepared to meet.
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.Apple sees TV as a way to push further product growth, but persuasion tactics that have worked in the mobile phone and music industries aren't working in the television industry. Content providers are reluctant to agree to Apple's terms because it would compromise traditional revenue streams. As The Wall Street Journal points out, inking a "sweetheart" deal with Apple could lead to traditional cable distributors demanding similar deals.
Disney balked. Similar talks with media giants that included 21st Century Fox Inc. and CBS Corp. also stalled.
Over the last several years, Apple has made several attempts to enter the television market, seeking deals with Time Warner, Comcast, and other providers, but nothing has panned out. In one instance, Apple wanted full on-demand seasons of hit shows and a recording feature that would include ad-skipping in newly aired shows, something cable executives were surprised by.
Apple sought payments of $10 a month per subscriber from the cable providers and refused to rule out seeking an even higher share of each monthly subscription in the future, according to people involved in the talks. It also wanted users to sign in with Apple IDs, even though Comcast and Time Warner Cable would handle billing and customer service.Up until last year, Apple was still in talks for a streaming television service that would bundle several popular live channels and on-demand television at a price point of approximately $30 per month, but Apple reportedly put the project on hold after being unable to establish the necessary deals because content providers were reluctant to unbundle their channels. Cue, who leads most of the deals, is known for his "hard-nosed" negotiating style and refuses to settle for less than what Apple wants.
Instead, Apple has shifted towards positioning its Apple TV set top box and the tvOS App Store as a platform to allow networks to share their own original content. Apple is also following in the footsteps of Netflix and Amazon Video with original programming aimed at promoting services like Apple Music and the App Store.
Three shows are in the works: a dark semi-autobiographical drama starring Dr. Dre called "Vital Signs," a reality series that follows App Store developers called "Planet of the Apps," and a music-based reality show that's a spinoff of "Carpool Karaoke."