Report: Apple's negotiations hurt plans for TV service


Wall Street Journal:

Apple Inc. executives had every reason for optimism when they approached Walt Disney Co. in early 2015 to join the streaming television service Apple planned to launch. Disney Chief Executive Robert Iger is an Apple director and had said he was keen to strike a deal.

Disney, which owns channels such as ESPN and ABC, was stunned, though, when Apple executive Eddy Cue made demands that would have upended decades of cable-industry and Hollywood practices, people familiar with the discussions say.

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.

When one side doesn't get what they want, it's not unusual to feel the other guy is being unreasonable.

The cable industry is long-entrenched through basically a near monopoly in many markets due to legacy franchise agreements. Growth is largely fueled by rate hikes and bundling in ways that give little choice to consumers.

If there is going to be a major shake up, it will have to come from an outsider, which means there would certainly be losers. The players are largely holding formation, but we'll see how long that lasts if cable keeps bleeding subscribers.