A Window Opens for Apple TV
These are interesting times in the cable industry.
Time Warner Cable announced yesterday that it would be dropping Ovation -- an obscure independently owned cable channel -- from its lineup at the end of the month.
In a move to justify the escalating costs that the cable television provider passes on to its customers, Time Warner Cable is assessing each and every network as it comes up for renewal. Ovation may have been as easy cut. Time Warner Cable claims that less than 1% of its customers were viewing Ovation's programming on any given day. The fledgling network counters that Time Warner Cable cable customers would be paying just "pennies a month" for the network, but what's the point if more than 99% of the subscribers aren't watching? Instead of pennies per month, it's more like dollars per month divided by those that are watching -- subsidized by everybody else.
This was an easy battle, but more difficult decisions are coming. Madison Square Garden and AMC Networks have squared off with cable and satellite television companies over the past year. Amicable resolutions were reached, but a sticking point in the negotiations has been that Madison Square Garden and AMC have smaller channels that they try to shoehorn into their renewals.
Cable providers have had enough, largely because their customers have had enough. Pay TV audience growth is starting to shift into reverse. The six largest cable and satellite television companies suffered 292,000 net defections during the third quarter. Time Warner Cable was the biggest sinker, closing out the period with 140,000 fewer families than it had three months earlier. If rising cable prices are the root of the cord-cutting, pay TV has to wake up and stop bundling stations that customers are tiring of paying up for.
How many homes watch both MSNBC and Fox News? How many homes watch both ESPN and QVC? Customers want piecemeal television. The cable industry has been built over the years on its ability not to give viewers that choice.
This brings us to Apple . The iEverything company is working on a smart television. This isn't a surprise. We just don't know when we will able to buy it. If all Apple does is connect TV to the Web, that's not enough. Several companies are already doing just that. If Apple thinks it will raise the stake with apps and a touchscreen controller, even the new Wii U has planted that flag before the tech giant. No, Apple's real contribution to TV will have to come in revolutionizing television the way that it did music through iTunes. Instead of forcing folks to buy the bundled albums with filler, music fans can pick out the tracks. Isn't this inevitably where television is heading? Apple needs to act now, while there's discord between the service providers and the cable networks.
This window may not last forever, so what are you waiting for, Apple?
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The article A Window Opens for Apple TV originally appeared on Fool.com.Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Madison Square Garden. Motley Fool newsletter services recommend 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.