Apple Inc. (AAPL:US) is nearing a deal with Time Warner Cable Inc. (TWC:US) to give subscribers of the cable television service access to channels via Apple TV, people with knowledge of the negotiations said.
The companies plan to announce an agreement within a few months, said the people, who asked not to be identified because the talks are private. The iPhone maker is also hiring Pete Distad from online-video service Hulu LLC, where he was senior vice president in charge of marketing and distribution, to help Apple executives in negotiations with media and cable companies, two people with familiar with the matter said.
A deal with Time Warner Cable would be a first with a cable company for Apple, which said last month that it’s also adding content from Time Warner Inc. (TWX:US)’s HBO and Walt Disney Co. (DIS:US)’s ESPN. Apple is aiming to bolster sales of the $99 set-top box amid competition from Roku Inc.’s device and Microsoft Corp. (MSFT:US)’s Xbox. Meanwhile, media and service providers have been seeking more outlets to deliver shows to customers, who are opting for on-demand viewing and watching fewer scheduled shows.
“It’s not necessary for Apple to remake the media industry to sell a great TV product,” Benedict Evans, an analyst at Enders Analysis in London, said in an interview. “They are methodically adding to Apple TV.”
Apple, based in Cupertino, California, rose 0.6 percent to $420.80 at the close in New York, adding to a 2.3 percent gain yesterday after Bloomberg reported on the deal. Time Warner Cable increased 2.7 percent to $112.45.
The potential deal with Time Warner Cable shows Apple working within the existing pay-TV business model, rather than directly offering live TV programming. Media companies that own television shows and movies have been reluctant to sell content directly to online services because it could harm sales from cable and satellite operators.
Apple’s approach to television differs from Intel Corp. (INTC:US), which is negotiating with media companies to build an Internet-based service that would compete more directly with cable and satellite companies.
Time Warner Cable, whose two biggest markets are New York and Los Angeles, has struck similar deals to make programming available through Roku’s online TV device and the Xbox gaming console. The second-largest U.S. cable provider also said last month it would start making programming available for some televisions made by Samsung Electronics Co. (005930) It also makes channels available for the iPhone, iPad and mobile devices running Google Inc.’s Android through its application called TWC TV.
“We don’t have an agreement with them at this time,” Susan Leepson, a spokeswoman for Time Warner Cable, wrote in an e-mail. She declined further comment. Meredith Kendall, a spokeswoman for Los Angeles-based Hulu, declined to comment. A spokesman for Apple declined to comment.
Time Warner Cable Chief Executive Officer Glenn Britt has been a vocal supporter of giving up control of the user interface to other companies if it gives paying subscribers a better TV viewing experience. While Time Warner Cable is introducing its own new TV guide later this year, Britt has said the company should give its customers the choice of other guides if they’re superior.
“We think that allowing people to get the very best experience is key competitively,” Britt said in August. “As long as they buy video from us, I don’t really care.”
Tim Cook, Apple’s CEO, said in May that more than 13 million Apple TVs have been sold since the device was released in 2007. Television is an area of “intense interest” to Apple, Cook said.
“When you look at the TV experience, it’s not an experience that I think very many people love,” Cook said at the D: All Things Digital technology conference. “It’s not one that has been brought up to date for this decade. It’s still an experience much like 10 years ago or 20 years ago.”
To bolster the effort, Apple is hiring Distad from Hulu. He led the online video service’s customer acquisition efforts and push to make the Hulu Plus application available on different Web-connected devices, including Apple TV. Before that, Distad was previously a management consultant at McKinsey & Co. He will report to Phil Schiller, Apple’s senior vice president of product marketing, whose team has done deals to add applications like Hulu Plus to Apple TV, one person said.
Apple TV has evolved from a way to watch TV shows and movies on iTunes to a device that offers access to additional paid and free content from other companies, including Netflix Inc. (NFLX:US), Google’s YouTube, Sky News and applications from U.S. sports leagues. Customers also can wirelessly stream pictures and video from iPhones and iPads to Apple TV through technology called AirPlay.
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