Apple's Ready to Disrupt Again
You're getting tired of hearing about Apple's (NAS: AAPL) rumored TV.
Is it coming? When is it coming? Will it be too expensive? Will the sets be too small?
However, there's a little nugget so meaty that it may disrupt the television industry as we know it.
Sterne Agee analyst Shawn Wu notes that Apple is trying to roll out an Internet-based television service where viewers can cherry-pick the channels or shows that they want to watch for a monthly subscription fee.
There seems to be little chance that the cable networks will play along. CBS (NYS: CBS) admitted last month that Apple had approached the media giant, offering a revenue-sharing arrangement in a streaming TV service. CBS passed, arguing that it prefers to license its content.
Apple is probably running into that same kind of resistance elsewhere.
Cable networks are a racket. This week, Time Warner Cable (NYS: TWC) and Madison Square Garden (NAS: MSG) are battling it out over renewals. Time Warner Cable wants to secure rights to MSG to make sure its subscribers get their steady diet of Knicks and Rangers games. MSG is asking for a healthy rate increase, but also demanding that Time Warner Cable continue to carry Madison Square Garden's lightly viewed Fuse music channel as a package.
Isn't this what's wrong with television these days? Couch potatoes are stuck paying for channels that they never watch.
Is there really a home out there that watches MSNBC and Fox News? Even if there is that one bipartisan home, don't you think even that family would want to pay less and get just one -- or none at all?
Why is ESPN -- which media tracker SNL Kagan claims sets distributors back a whopping $4.69 a month per home -- part of most cable packages? I have no problem paying that, but I doubt my parents would feel the same way. MTV may seem to be a relative bargain at $0.37 per home, but is anyone still watching the original music channel beyond Jersey Shore buffs?
This is where Apple steps in. The challenge seems daunting, but folks didn't give Apple much of a chance when it revolutionized the music industry with 2003's iTunes Music Store launch. If Apple can find a way to let couch potatoes actually pay only for the stuff that they're watching -- potentially shaving down their TV bills -- suddenly paying a premium for a smart television isn't so outlandish after all.
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At the time this article was published The Motley Fool owns shares of Apple and Madison Square Garden. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in 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.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.