Apple 2.0

Covering the business that Steve Jobs built

Can Steve Jobs unplug cable TV?

December 22, 2009: 8:21 AM ET

CBS and Disney may join Apple's $30 per month TV service, says the Wall St. Journal

Photo: Apple Inc.

This could be totally disruptive. Or it could be another "hobby" like Apple TV that never quite takes off.

In a front-page story published Tuesday, the Wall Street Journal reported that CBS (CBS) and Disney (DIS) are "considering participating" in Apple's (AAPL) plan to offer television subscriptions over the Internet.

It was the first hint of interest from TV content providers since the news broke last month -- in All Things Digital, another News Corp. (NWS) property -- that Apple was preparing to offer such a service to its 100 million-plus iTunes subscribers.

As initially described, customers would pay Apple $30 a month for streaming access to the best of TV.  Cable companies charge Americans an average of more than $70 a month for huge bundles of programs, most of which their subscribers never watch and didn't ask for.

Apple's service would be more like a streaming music service that offers all the content you want for a flat monthly fee. Without a critical mass of popular TV shows, it will never get off the ground. But if Steve Jobs can broker enough deals in Hollywood, the company may be, as MG Siegler puts it in TechCrunch Monday night, "on the verge of kneecapping the cable industry."

According to the Journal, Apple is offering $2 to $4 a month per subscriber to the major networks, and $1 to $2 for per subscriber to the cable companies -- more than they get from traditional distributors for their content. "The question," as the Journal puts it,  "is whether selling fewer networks at higher prices is better business."

Another issue is whether iTunes TV would be advertising-free.  U.S. broadcast and cable networks sold $43.4 billion in ads in 2008, according to TNS Media Intelligence.

As one media executive told the Journal: "You don't want to shoot a hole in the bucket to create another revenue stream.

Apple already sells individual TV shows from a list of content providers that includes ABC, NBC, CBS, HBO, Fox, Showtime, MTV, Nickelodeon, Discovery, Disney, the CW and Comedy Central, but they cost $1.99 to $2.99 a pop.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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