Apple Can’t Seem to Cut a Deal With Hollywood

March 3, 2017, 8:50 PM UTC
Apple TV interface
Netflix had the most popular show of 2016.
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Apple may be one of the most valuable companies in the world, with a market capitalization of more than $700 billion and a cash hoard of close to $250 billion. But all of that power and money hasn’t helped the company figure out how exactly to integrate movies and TV into its universe.

A recent report in the New York Post paints a picture of a company with all the resources in the world, but no real vision for what it wants to do when it comes to Hollywood. According to various sources, several senior executives including Eddy Cue and Jimmy Iovine have been taking meetings with senior studio types, but the reason for these meetings seems vague.

Some of those who spoke with the Post got the impression that Apple wanted to hire senior executives to run some kind of TV and/or movie venture, while others said it sounded like Apple (AAPL) was working on a possible acquisition to jump start such an effort.

There seemed to be some confusion about who exactly is leading Apple’s effort to win over Hollywood, according to the Post. “Robert Kondrk, Eddy Cue, Jimmy Iovine, everyone is trying to be the person,” an industry insider told the paper, while another said “Eddy is talking to some people. Jimmy is talking to others. They just haven’t figured it out.”

Apple was close to acquiring a Hollywood production company recently, according to the Financial Times. Senior Apple executives were in talks with director Ron Howard’s Imagine Entertainment, which has been behind hits like Apollo 13 and The Da Vinci Code. But the deal ultimately fell apart for unknown reasons.

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Apple also reportedly considered a much larger content acquisition last year: A number of news outlets said the company made a takeover bid for content giant Time Warner, which owns HBO and CNN among other things, but the latter decided to accept an offer from telecom player AT&T instead. And Apple has been rumored for some time to be a potential bidder for Netflix, although that would be a massive acquisition.

Apple has been working on the idea of a “cable killer” bundle of streaming TV channels and content for years, but its plans have repeatedly run into roadblocks. Google has been working on a similar idea for almost as long, but it actually made its version—known as YouTube TV—available this week.

According to a number of reports, Apple has been held back in part by the same thing that kept Google’s (GOOG) venture stalled for so long: The desire by TV networks and companies like Time Warner to be paid handsomely for their content, and also to have Apple carry all of their channels and content instead of just a select few.

These restrictions have made it difficult for both Apple and Google to put together the kind of service they wanted at the price point they wanted. YouTube TV has so many gaps in what it offers that some observers say it’s not really much better than traditional cable.

The cable-style bundle is just one of a number of ideas Apple has had when it comes to the future of TV. It also briefly considered building its own TV sets, and more recently came out with a master “TV guide” software program, which some saw as an admission that it had given up on its larger plans. But that appears not to be the case.

In addition to pricing and control issues, some have criticized what they say is arrogance on Apple’s part for making some content producers and entertainment outlets reluctant to deal with the company. One cable-industry executive told the Wall Street Journal that senior VP Eddy Cue’s negotiating strategy consisted primarily of saying: “We’re Apple.”

An additional factor could be that while Apple is credited with helping to save the music business by offering a one-stop subscription service with iTunes, TV industry executives don’t feel they are quite as desperate for Apple’s help.

“We’re challenged in a lot of ways, but we’re not waiting for this white knight to come racing in the way music was,” one TV executive told the Journal last year.

The bottom line is that Apple’s ambitions in the content industries seem to be hampered in part by a lack of a consistent vision about what the company wants to do and why, combined with a culture clash between existing movie studios and TV networks about who is the most important player in the relationship, and who gets to control the terms.

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