Bloomberg News

Apple Adds HBO and ESPN Programs to Boost Online-TV Offering (5)

June 19, 2013

Apple Inc. (AAPL:US) is adding sports, movies and shows from Time Warner (TWC:US) Inc.’s HBO and Walt Disney Co. (DIS:US)’s ESPN network to Apple TV, one of its biggest expansions of programming since the product debuted in 2007.

Shows including “SportsCenter,” “Monday Night Football,” “Game of Thrones” and “Boardwalk Empire” are among those available starting today through Apple TV for cable-TV customers who already subscribe to ESPN and HBO, Cupertino, California-based Apple said today in a statement.

Adding HBO and ESPN to the lineup of Apple TV services that already included Netflix Inc. (NFLX:US) and Hulu Plus may help the iPhone maker bolster sales of a set-top box that has faced stiff competition from Roku Inc.’s device and Microsoft Corp. (MSFT:US)’s Xbox. Time Warner and Disney, who have been making more material available on smartphones and tablets, gain another outlet to deliver shows to viewers, who have turned toward on-demand viewing and are watching less scheduled programming.

“It’s an indication of where the industry is headed,” said Jaison Blair, an analyst at Telsey Advisory Group in New York. “The consumer is increasingly going to demand that their content is available on all their devices.”

Even so, Apple is working within the confines of the U.S. cable industry by limiting access to the ESPN and HBO apps. Media companies that own the channels have resisted letting streaming services sell programming directly to consumers out of concern that such a move might not generate enough revenue to make up for the potential loss in cable subscriptions.

‘Well Protected’

“The cable bundle is relatively well protected,” Blair said in an interview.

Defending the status quo carries risks for media companies and cable providers as subscribers become increasingly frustrated by rising monthly bills, he said. Content producers keep increasing license fees, with costs passed to subscribers.

“The programmers are killing the golden goose,” Blair said.

With Apple’s new offering, viewers will be able to watch programming from ESPN’s different networks live after authenticating their cable subscription. A limited amount of sports content will be available for free, similar to what’s available on ESPN’s website. For HBO, the product will work like the network’s HBO Go iPad application, with subscribers getting access to its catalog of shows and movies on demand.

The HBO Go app won’t be available through Apple TV for subscribers of Charter Communications Inc. and DirecTV, while the ESPN service won’t work for users of Dish Network Corp. or DirecTV.

Offering Incentives

Besides HBO and ESPN, Apple also is adding content from News Corp. (NWSA:US)’s Sky News channel, as well as Crunchyroll, a distributor of content from East Asia, and Qello, which offers an archive of concerts and music documentaries. Customers will be able to buy Crunchyroll and Qello content on iTunes.

In addition to selling downloads of shows and movies through iTunes, Apple has in the past held talks about new ways of selling access to programming directly to customers, an idea that has been spurned by media companies, people familiar with the matter have said. Intel Corp. (INTC:US) is also negotiating with the owners of shows and movies to create an online pay-TV service, people familiar with the efforts said earlier this year.

To foil plans like those, Time Warner Cable Inc. and other pay-TV operators are offering incentives to media companies that agree to withhold content from Web-based entertainment services, people with knowledge of the matter said this month.

Apple TV is a $99 set-top device that streams content purchased on iTunes and via other online services to consumers’ televisions. Chief Executive Officer Tim Cook said last month that Apple has sold more than 13 million units of the set-top box since it was introduced in 2007, with half of that in 2013.

ITunes users have downloaded more than 1 billion television episodes and 380 million movies since the service’s debut, Apple said, and they’re purchasing more than 800,000 shows and 350,000 movies a day.

Apple shares fell 2 percent to $423 at the close in New York. They have dropped 21 percent this year, compared with a 14 percent gain for the Standard & Poor’s 500 Index.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Anthony Palazzo at apalazzo@bloomberg.net


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Companies Mentioned

  • AAPL
    (Apple Inc)
    • $100.53 USD
    • 1.37
    • 1.36%
  • TWC
    (Time Warner Cable Inc)
    • $147.92 USD
    • -0.51
    • -0.34%
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