Apple Inc. (AAPL) to Delay Launching of Live TV Service until 2016

Apple Inc. (NASDAQ:AAPL) will delay the launching of its live TV service until 2016, according to Bloomberg based on information from people familiar with the company’s plan.

The report indicated that Apple’s negotiations with CBS Corporation (NYSE:CBS) and Twenty-First Century Fox (NASDAQ:FOX) regarding licensing programming is moving slowly.

The people said Apple decided to cancel its plans to announce the live TV service during an event in San Francisco on September 9 because it does not have enough deals in place.

The tech giant still plans to introduce a more powerful Apple set-top box during the September 9 event, but customers will still need a cable or satellite TV subscription or antenna to watch live network television.

TV programming is the core of the strategy of Apple to keep the company in the center of people’s digital lives.  The sources said the primary stumbling block in the tech giant’s strategy is the price of content. Apple wants to offer a package of popular channels for $40 a month, which is nearly half the price of the average cable bill in the United States.

TV programmers expect higher payment from Apple

Bloomberg noted that TV programmers are expecting higher payment from Apple and other internet-based service providers than existing cable and satellite TV partners.

The reason behind their higher expectation is the fact that Apple and other internet-based service providers are new to the market and aims to gain share.  The sources said Apple’s discussions with CBS, Fox and NBC have been delayed over the past several years.

Media conglomerates like the possibility of a new player entering the market and willing to pay for their networks because of the declining numbers of pay-TV subscribers.

New revenue source for Apple

The live TV service will serve as a new revenue source for Apple. Currently, the tech giant is under pressure to improve its long-term growth outlook. Apple is expected to achieve a revenue growth rate of only 5.3% next year due to slowing sales of iPhone worldwide. Its projected growth rate was significantly lower than its 28% revenue growth this year.

FBR Capital Markets analyst said,” Streaming TV would provide another future growth avenue into the next generation consumer,” Ives said. “It represents the next frontier for Cook & Co. [referring to Apple CEO Tim Cook]. He estimated that a TV service could generate revenue of around $2 billion to $3 billion by 2018.

Source: Bloomberg